international paper appm limited th annual report 2019 report... · 2019-07-02 · members can...

INTERNATIONAL PAPER APPM LIMITED

55th ANNUAL REPORT 2019

TABLE OF CONTENTS

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MANAGEMENT NARRATIVES Chairman’s Message 02

Corporate Overview 03

Sustaining Forests 04

Investing in People 06

Improving Our Planet 08

Innovative Products 10

Inspired Performance 12

Corporate Social Initiatives 14

Board of Directors 15

Corporate Information 16

GOVERNANCE Board’s Report 17

Management Discussion & Analysis 32

Report on Corporate Governance 39

FINANCIAL SECTION Independent Auditor’s Report 50

Balance Sheet 56

Statement of Profit and Loss 57

Statement of Changes in Equity 58

Cash Flow Statement 59

Notes forming part of the financial statements 61

1

2

3

1Annual Report 2019

CHAIRMAN’S MESSAGE

Dear Shareholders,

I have mixed emotions as I write to you regarding our

company results and position for FY 2019. I am happy

to report that it was a year that included many record

best performances for IP APPM. We have delivered our

best-ever financial performance driven by record sales

with efficient mill and business operations and record

profits. The great team of leaders and people of IP APPM

have dedicated themselves to improving company

performance and they have done it again in FY 2019. My

mixed emotions come from the news that International

Paper Co. announced the sale of its controlling interest in

IP APPM to West Coast Paper Mills Ltd. This may be the

last annual report as IP APPM, but I am very confident that

this business is well positioned to succeed in its future

with West Coast.

We continue to move in the right direction to create more

value for our customers. Our customers depend on

us to enable their own business success. They need

our paper to print, to publish, to convert and to sell.

During FY 2019, we improved our OTIF delivery rate

(On-Time-In-Full) to ~93%, top tier in the Indian paper

industry. With new and innovative products and service

solutions, we can ensure that we provide the best

possible value to our customers and further solidify our

partnerships.

Our employees have driven the performance of the

company: from sales to operations, from procurement

to finance and all of the functions needed to make

our business work. We depend on our people, so we

invest in our people. From leadership training to new

job assignments, from six-sigma skills to precision

maintenance, we are investing in our people to develop

better capabilities to improve the business performance.

We match leadership and skills with proven processes to

drive improvements. Good examples are safety and mill

productivity. Employee safety is managed under the Safety

Leading Indicators program and results have improved

by 20%. We are getting closer to the ultimate goals of

zero safety incidents. Our productivity improvements are

enabled by people using our Manufacturing Excellence

programs which created record pulp and paper production

in FY 2019.

Our forestry team has further enhanced our strategy for

sustaining forests enabling long term access to cost

competitive fibre. Sustainable low cost fibre is critical to

our strategy and the health of the paper industry. We are

partnering with R&D scientists, private growers and the

farming community to develop clones that increase yield

thus creating value for both IP APPM and the extensive

farming community linked to our business.

We care deeply about the environment, so we have

developed a long term plan for sustainability that will

reduce our environmental impact over time and help to

improve our planet. In the short term, we take deliberate

efforts to improve our use of water, chemicals and energy

as well as improve our stack air emissions and solid waste

disposal. We are accountable for our environmental impact

and take responsibility for making improvements.

We have delivered an inspired performance for FY 2019.

Our stock price appreciation of ~40% over the year,

reflects record financial results and a strong balance sheet

that positions the company well, for the future.

I would like to extend my gratitude and appreciation to our

Board of Directors, the IP APPM leadership team and our

employees for their support and commitment. I believe

our future for IP APPM is bright.

Sincerely

Donald P. DevlinChairman & Managing Director

International Paper APPM Limited2

CORPORATEOVERVIEW

International Paper APPM Limited is a group company

of International Paper Company, USA, a world leader in

the paper and pulp industry.

The fifty five year old Company is an integrated paper

and pulp manufacturer with a total production capacity

of 241,000 TPA. The Company produces a range of

premium grade writing, printing, copier and industrial

papers for domestic and export markets. Each of

these products offer a differentiated proposition and is

targeted to meet unique needs of discerning customers.

The Company has ~1,900 permanent employees and

~3,200 contract workers. The manufacturing facilities

comprise of two mills at Rajahmundry and Kadiyam,

both located in the East Godavari District, and a

conversion center at SN Palem in Krishna District, all

located in the State of Andhra Pradesh.

It is our vision to become one of the best and most

respected companies in India - as measured by our

employees, our customers, our communities and our

shareholders. To achieve this goal, the Company is

focused on excellence on its five drivers – sustaining

forests, investing in people, improving the planet,

creating innovative products and delivering inspired

performance, while maintaining high standards of

integrity and safety in everything we do.

Our Vision

Our vision is to be among the most successful, sustainable and responsible companies in India

Create Value for

Customers

Create Value for

Shareholders

Create a Great

Place to Work

Safety of Our Employees

and Contract Workers

High Ethical Standards

Commitment to Excellence

Support our Communities

Commercial Excellence &

Customer Focus

Manufacturing Excellence

• Productivity• LowCost• Efficiency• Compliance

A Performance-based Culture

Business ObjectivesOur Values Operating Principles

3Annual Report 2019

Our entire business depends

upon the sustainability of

forests. We will continue to

lead in responsible forest

stewardship to ensure

healthy and productive forest

ecosystems.

SUSTAINING FORESTS


Forest

Our Company’s farm forestry program generates more wood

on the earth than we consume; in fact, at more than double

the rate of consumption. Our investment towards responsible

farm forest stewardship ensures a healthy and productive

forest ecosystem.

The Company has begun execution of its fiber strategy to

increase procurement within a radius of 150 KM the mills. In

this direction, the Company initiated partnerships with leading

forestry institutions to complement its forestry R&D program.

The Company is committed to increase farmers’ income by

increasing per unit yield from their pulpwood plantations.

Research and Development

Our research and development projects have helped in

ensuring higher survival percentage of seedlings, higher

productivity per unit area and reduction in the rotation cycle.

In order to be environmentally friendly, we have eliminated

the traditional practices of poly bag nursery techniques, and

other low cost planting techniques have been introduced.

International Paper APPM has also introduced high yielding,

disease resistant Casuarina clonal saplings, which ensures

additional silvicultural gains for the farmers. The clonal research

activities have been extended to the mill catchment areas of

Andhra Pradesh in order to meet the growing demand of the

beneficiaries.

During the year the Company distributed 2.5 million high

yielding clones along with 32 million Casuarina seedlings

to farmers. The total number of saplings distributed since

1989 has gone up to 1751 million since 1989. As at March

31, 2019 there are 2.53 lakh hectares of forest area under

IP APPM’s farm forestry initiatives benefiting 8892 farmers.

1,751million

saplings since 1989

2.53 lakh hectares under farm forestry

initiatives since 1989

35million saplings planted in FY19

8,892 farmers sustaining our forest

programme

3,581 hectares of farm forestry

added in FY19

1,471 new farmers added in FY19

Annual Report 2019 5

We invest to protect and

improve the lives of our

employees, mobilize our

people, products and

resources to address critical

needs in the communities

where our employees live

and work.

INVESTINGIN PEOPLE


Safety

The safety of our employees is our highest priority. We

have robust safety programs that require leadership, sound

policy, continual training plus certification and constant

communication. Most importantly, it requires our employees

to engage and take responsibility for the work environment

and safe behaviours of themselves and their colleagues.

We have implemented a safety leading indicator program

that focuses on identifying and eliminating risks and hazards

before they become an incident. These efforts are continuous

and evolving to achieve and maintain an injury-free workplace.

Attract Talent

Talent is needed at all levels. We hire young engineers to

develop future leaders. We hire the industry’s best talent to

develop mid-level leaders. We promote from within to develop

our bench strength for top management.

Develop Capabilities

We use a combination of training, coaching and on-the-job

experience to develop our people. From safety to maintenance

skills, to 6 sigma and leadership development, we invest in

our people to create a work-force that is highly engaged and

improving capabilities.

Retain + Engage

We believe that highly engaged employees care more about

their efforts, care more about their colleagues and produce

better results for safety, production, serving our customers

and earning better profits.

~1,900Employees

70Participated in the annual

leadership conference

High participation in Key Training Programs:• Leadership

• Safety

• Precision Maintenance

• Health & Wellness

• Manufacturing Excellence

• Market-Based Value


We make paper products from

fibre, which comes from nature

and sustainable forests. Along with

promoting sustainable forestry

practices, our goal is to minimize the

environmental impact and promote

the long-term sustainability of

natural capital.

IMPROVING OUR PLANET

Our Sustainability Goal

With the fast pace development of country, resources are becoming increasingly

scarce, therefore, being India’s one of the largest pulp & paper manufacturing

units and recognizing our environment responsibilities towards our stakeholders,

we embarked upon an ambitious journey to identify global trends, material to

our business and develop long term sustainability goals around it during the year

2018-19. We created Vision 2030 document, focusing on broadly five material

aspects namely Fiber, Air, Water, Energy and Solid waste where we can have the

greatest impact. We defined our sustainability policy and created 12 long term

sustainability goals related to above 5 material aspects and now we are in the

process of developing road map to achieve these goals by 2030. This initiative will

help us in establishing as one of the most successful, sustainable and responsible

companies in India.


Land, Water and Air

We are committed to compliance with environmental

regulations and continuously monitor our actions and output

to ensure we operate within limits. Our mills have direct links

to the Andhra Pradesh PCB monitoring systems providing live

daily feeds.

We are investing capital to reduce water consumption,

convert sludge to energy and improve controls for boiler stack

emission and odorous chemicals.

The monitoring of effluent treatment plant performance

has facilitated the reuse, reduction and recycling of sludge.

New technologies were adopted for odour control to collect

and treat foul streams. Implemented projects to reuse and

recirculate water within our mills to minimize consumption of

fresh water.

We invest in R&D and collaborate with both farmers and

government to support a sustainable forestry strategy

ensuring a healthy forest and sustained access to fibre for

years to come.

5.86%Reduction in power

consumption/ton of paper

5.36%Reduction in process

steam consumption/ton of paper

9.4%Reduction in water

consumption/ton of paper.

1.13%Reduction in average daily

effluent discharge

11.62 Lakh m3

Annual volume of water supplied

to villages in Kadiyam and

Rajahmundry


We create innovative,

sustainable and

recyclable products

that help our

customers achieve

their objectives.

INNOVATIVE PRODUCTS


We continue to focus on creating

innovative, sustainable and recyclable

products that help our customers achieve

their needs and satisfy changing consumers.

IP APPM manufactures a wide variety of

writing, printing, copier and speciality papers

for foreign and domestic markets.

Apart from developing new products,

keeping industry dynamics in mind, it is our

continuous endeavour to improve the existing

products based on feedback from customers

& trade partners to make our products suit their

requirements.

FY19 Highlights

The Sales Volumes grew by over 3.4%, which

correlates to around 7800 MT over FY18.

New Products Introduced

New products introduced in 2018: HP-70GSM,

IPAPPM Cupstock on RJ#2 and developed TruPrint

Premium on RJ#3.

Writing and Printing

We offer a wide range of superior quality writing and printing

papers suitable for printing journals, text books, reference

books, calendars and a variety of other commercial printing

applications as well as for notebooks and diaries.

Copier

The papers are available in best-in-class brightness and

produced with Elemental Chlorine Free (ECF) Pulp technology.

Our range is perfect for high volume photocopying and high-

quality color printing needs and engineered to run flawlessly

on all types of Photocopiers, Laserjet and Inkjet printers and

Multi-functional devices.

Speciality

IP APPM offers a wide range of superior quality Specialty grade

products that are custom engineered to suit specific and diverse range

of applications.

11Annual Report 2019

We strive to deliver long-term

value for all stakeholders.

By investing in attractive,

fibre-based markets,

controlling costs, managing

capital spending and focusing

on deliberate improvement

efforts to increase productivity

and efficiency, we have

generated strong,

free cash flow.

INSPIRED PERFORMANCE


Social Economic Value Added

Taxes Paid

` 11,126 lakhs

CSR Spent

` 114 lakhs

Employee Benefits Expense

` 15,268 lakhs

Farm Forestry Spent

` 183 lakhs

Safety

Reduced number of safety incidents by 20%.

Financial

The Company's financial performance improved by earning its highest recorded EBITDA and PAT. These results

were driven by higher sales volume, higher selling prices as well as record production levels and improved

efficiency and manufacturing cost. While EBITDA registered a substantial increase, Profit After Tax improved by

140% supported by better sales, improved efficiency and manufacturing cost.

Operational Excellence

Our teams have integrated the Manufacturing Excellence approach to identify internal process improvement

opportunities. Now employees are driving operational initiatives and reliability improvements that provide

significant year-over-year benefits.

Key Performance Metrics

Revenue

Sales Volume

OTIF

EBITDA

Production Volume

Overall Machine Efficiency

Profit After Tax

Free Cash flow

FY 16-17 ` 123,094 lakhs

220,900 MT

81%

` 17,610 lakhs

` 127,980 lakhs

230,900 MT

90%

` 22,676 lakhs

228,900 MT

89%

` 8,306 lakhs

` 20,730 lakhs

`142,733 lakhs

238,700 MT

92%

` 39,317 lakhs

238,700 MT

90%

` 20,008 lakhs

` 33,695 lakhs

FY 16-17

FY 16-17

FY 16-17

FY 16-17

FY 16-17

FY 16-17

FY 16-17

FY 17-18

FY 17-18

FY 17-18

FY 17-18

FY 17-18

FY 17-18

FY 17-18

FY 17-18

FY 18-19

FY 18-19

FY 18-19

FY 18-19

FY 18-19

FY 18-19

FY 18-19

FY 18-19

215,700 MT

87%

` 3,240 lakhs

` 15,311 lakhs


CORPORATE SOCIAL INTIATIVES

We believe that investing in the communities where our employees live and

work is crucial to their sustainable development and we have been involved

in community development work since our inception. The focus areas of

Company’s Social Initiatives - Health & Wealth, Education and Community

Engagement make positive contributions to the Communities around the

manufacturing facilities and farm forestry areas.

Awards & Recognitions

CSR award 2018 was presented by Janmabhoomi Committee to the Company for impactful CSR projects

undertaken by it in the areas of Health and Wellness, Education and Community Engagement.

Health & Wellness

Safe drinking water

Hospital Infrastructure

FY 19 CSR Spent

` 113.79 lakhs

Safe drinking water

6 Plants

3,000 Households

Education

Teacher’s training

School Infrastructure

Scholarships

Spoken English Training

Teacher’s training

100 Teachers

10,000 Students

Scholarships

120 Students

74 Schools

Spoken English Training

1,700 Students

12 Schools

Community Engagement

Monetary support to Kerala State

Government for rehabilitation of

people affected by floods.

Monetary support to the families of

deceased CRPF Personnel.


BOARD OF DIRECTORS

Mr. Donald P. Devlin Chairman & Managing Director

Mr. W. Michael Amick Jr. Non Executive Director

Mr. M.S. Ramachandran Independent Director

Mr. Adhiraj Sarin Independent Director

Mr. Milind Sarwate Independent Director

Mr. Russell V. Harris Non Executive Director

Ms Megan A. F. Bula Non Executive Director

Mr. Praveen P. Kadle Independent Director


INDIA LEADERSHIP TEAM

Registered OfficeRajahmundry – 533 105

East Godavari District

Andhra Pradesh, India

Phone: +91 883 247 1831 to 1834

Fax: + 91 883 246 1764

Corporate OfficeKrishe Sapphire Building,

8th Floor, 1-89/3/B40 to 42/KS/801,

Hi-tech City Main Road,

Madhapur,

Hyderabad – 500081

Telangana, India

Phone: +91 40 3312 1000

Fax: +91 40 3312 1010

www.ipappm.com

WorksUnit: RAJAHMUNDRY

Rajahmundry – 533 105

East Godavari District,


Phone: + 91 883 247 1831 to 1834

Fax: + 91 883 246 1764

Unit: KADIYAM

Industrial Area,

M R Palem – 533 126

Kadiyam Mandalam,



Phone: +91 883 245 4651

Fax: +91 883 245 3538

CIN: L21010AP1964PLC001008

AuditorsDeloitte Haskins & Sells,

Chartered Accountants

Hyderabad

Cost AuditorsNarasimha Murthy & Co.,

Cost Accountants

Hyderabad

Secretarial AuditorsD. Hanumanta Raju & Co.,

Company Secretaries

Hyderabad

BankersState Bank of India

Axis Bank

Citi Bank N.A.

Bank of America N.A.

BNP Paribas

JPMorgan Chase Bank N.A

CORPORATE INFORMATION

(Left to right): Mr. Anish T. Mathew (Chief Financial Officer), Mr. Sura Reddy Mallidi (Head - Operations),

Mr. Shyam Srivastava (Purchasing & Forestry), Ms Lakshmi Prasad (Government Relations),

Mr. Donald P. Devlin (Chairman & Managing Director), Mr. Sreenivas Pamidimukkala (Chief Information Officer),

Ms Karthika Kumaresan (Legal), Mr. Prabhakar Cherukumudi (Company Secretary & CSR) and

Mr. Atanu Chakrabarti (Sales & Supply Chain)



BOARD’S REPORT

Dear Members,

The Board of Directors has the pleasure in presenting its

55th Report along with the Audited Accounts for the year

ended March 31, 2019.

Performance Review

During the financial year 2018-19, the Company recorded an

impressive performance by recording its highest EBITDA and

Profit After Tax (PAT). While EBITDA registered an increase by

73%, PAT improved by 140%. These results were driven by

higher sales volume, higher sales price realization and lower input

cost. Improved productivity from our mills helped to generate

more volume for sales revenue and lower manufacturing

cost from more efficient operations. The Company continued

to focus on important initiatives for improving safety and

environmental compliance as well as improving the customer

experience and operational efficiencies.

Summary of Financial Results (In ` Crores)

ParticularsMarch 31,

2019March 31,

2018

Sales and other operating income 1427.33 1279.80

Earnings before interest,

depreciation and taxation (EBITDA)393.16 226.72

Finance costs 8.54 26.09

Depreciation 67.87 65.81

Profit before exceptional items 316.75 134.82

Exceptional items (5.42) (8.37)

Profit before tax 311.33 126.45

Tax expense 111.26 43.39

Profit for the year 200.07 83.06

Dividend

In order to conserve the resources for meeting future capital

needs related to maintenance, regulatory, cost reduction

and potential strategic projects, the Board of Directors have

decided not to recommend dividend on the equity shares of

the Company.

Markets, Customers and Commercial Excellence

Demand for Writing & Printing papers in India continues

to grow. From education to publishing, to office use, the

consumption of paper is moving with the many market

segments that are fueling the economic growth of India.

The supply and demand for paper during 2018-19 was

balanced with domestic and foreign producers competing for

customers and supply position. Foreign producers importing

into India are aggressively positioning their products and

establishing capable supply lines for selling quality products

into India. As a relatively small producer, IP APPM must have

high quality products, but must also distinguish itself among

the competition. Over time, customers expect more from us

so the commercial team is focused on improving the overall

customer experience. The product itself is just one piece

of the equation and we must deliver value to the customer

including product choice, dependable and consistent service

and capable technical support.

Our Forecast Accuracy of 81% and On-Time-in-Full

delivery rate of 92% are among the best in the Industry.

This high service level has helped our channel partners to

better plan their resources and commitments thus increasing

the value that we can provide for both the distributer and

customer.

Our concept of “Think Customer” is yielding better results to

enhance customer satisfaction by way of increased speed,

better On-Time-in-Full delivery and reduced Turn-Around-Time

to address quality improvements. The focus on high service

and delivering more value to our customers has ultimately

resulted in our ability to grow sales volume by ~3% over last

year.

Manufacturing, Operations and Safety

The manufacturing teams use a systematic approach and

programs for managing safety and manufacturing excellence.

Each year, we build improvement targets into the operating

plans. The results of these programs have helped to improve

safety performance by reducing incidents to the lowest level

recorded among employees. The mill manufacturing teams

have improved pulp and paper productivity to record levels

during FY 2018-19. The productivity improvements drove

lower costs for fiber, energy and chemicals and delivered

record paper production and sales.

Raw Material Security

Long term access to cost effective fiber is important to

our strategy. The IP APPM forestry team is building lasting

partnerships with farmers, research institutions and vendors.

These partnerships are important to ensure that each

participant gets a benefit from their investment.

The Company continued to focus on a long term fiber security

strategy by providing high quality Casuarina clones and

seedlings to farmers, with an eye to develop sustained fiber

supply within a catchment of 150 km radius. The Company

also partnered with private nurseries to build capacity for

production and distribution of clones. The Company also

continued to partner with the Institute of Forest Genetic &

Tree Breeding, Coimbatore (IFGTB) to ensure the broadest

approach to sharing best practices, gaining knowledge and

performing R&D for enhancing productivity.

All these activities shall ensure sustainable supply and long

term security of virgin fiber to our mill. Our farm forestry

program has led to the plantation of 2.5 million high yielding

Casuarina clones, along with 32 million Casuarina seedlings

within a radius of 150 Km of the mill. This covered 3,834

hectares of plantation and generated 1.92 million man-days

of employment for farmers. The Company’s policy to bring

down the procurement area near to the mill has further

helped in rationalizing the cost of virgin fiber during 2018-19.

Employee Development and Engagement

The Company’s agenda for engaging and developing its

employees includes initiatives to attract, develop and retain

talent. The key focus areas included diversity and inclusion,


succession planning, developing a talent pool for critical

positions, quality of life programs and leadership development.

We have taken a professional approach to industrial relations.

While upholding the IP philosophy of treating people with

dignity and respect as well as important principles of labor

relations, we engaged with the union leaders, management

and government.

The Company successfully signed a long-term collective

bargaining agreement, for the period January 2017 to June

2020, with Rajahmundry unit workmen on January 7, 2019.

In line with the philosophy of treating people with respect

and equity, the Company introduced medical insurance

policy for mill workers and their spouses that will cover their

hospitalization expenses.

The annual leadership conference was attended by Company’s

top 70 leaders. The Company used this opportunity to

recognize its leaders’ accomplishments as well as review the

success, failures and learnings from 2018. Finally, with all of

the top leaders in one room, the Company reviewed the goals

for next year and made sure that all are aligned on the 2019

priorities.

In May / June, 2019 the Company conducted MyView

Employee Engagement Survey which is aimed at

building an exceptional engagement culture that takes

everyone’s view into consideration – a culture that allows

for greater understanding and empowers each employee to

make a positive impact. The participation rate was around

98%. The survey results are expected in August, 2019

after which necessary action plan on the feedback will be

initiated.

Leveraging the power of Information Technology

In an effort to enable better decision making, provide

improved management of information and ultimately provide

better control of manufacturing processes, the Company has

initiated a program that utilizes technology for automation and

data analytics. In the long term, the benefits of automation

and data analytics should create value by saving time,

lowering cost and improving productivity.

Community Service and Engagement

The Company is committed to support of the communities

where it operates by supporting Education, Health & Wellness

and Community Engagement.

The Company had adopted a CSR Policy which is placed on

the Company’s website: www.ipappm.com. The Members of

Corporate Social Responsibility Committee as on March 31,

2019 comprised of:

Mr. M. S. Ramachandran (Independent Director) –

Chairman

Ms Ranjana Kumar (Independent Director) – Member

Mr. Donald P. Devlin (Chairman & Managing Director) –

Member

As per Section 135 of the Companies Act, 2013, the Company

is required to spend a sum of ` 111.32 lakhs during the

financial year 2018-19 whereas the Company spent a sum

of ` 113.79 lakhs (Including donation of ` 13.83 lakhs given

to IP India Foundation, a Section 8 Company) for supporting

various CSR initiatives in these focus areas.

The Annual Report on CSR activities is at Annexure- 1to the

report.

Awards

During the year under review, the Company received the

following Awards:

a. Certificate of Appreciation for good practices in safety

systems was presented in September 2018 to International

Paper APPM Ltd. - Unit Kadiyam by Federation of Indian

Chambers of Commerce and Industry; and

b. CSR award 2018 was presented by Janmabhoomi

Committee to International Paper APPM Limited for

impactful CSR projects undertaken by it in the areas

of health and wellness, education and community

engagement.

Related Party Transactions

All related party transactions that were entered into during

the financial year under review were at arm’s-length basis

and also in the ordinary course of business. There are no

materially significant related party transactions entered

into by the Company with the promoters, directors, key

managerial personnel which may have a potential conflict

with the interests of the Company at large.

The Board of Directors approved a policy on related party

transactions which is placed on the Company’s website.

The related party disclosures are given in Note No.35 to the

financial statements.

Remuneration Policy

The Company has adopted the Nomination and Remuneration

Committee Charter which includes the Company’s Policy

on directors’ appointment and remuneration including

criteria for determining the qualifications, positive attributes,

independence of a director and other matters provided under

Section 178(3) of the Companies Act, 2013.

Pursuant to Section 178(4) of the Companies Act, 2013,

the Company also adopted Remuneration Policy relating to

remuneration for the directors, key managerial personnel and

senior executives in the rank of vice president and above. The

Remuneration Policy is placed on Company’s website.

Technology Absorption & Energy Conservation

Particulars of conservation of energy, technology absorption

and foreign exchange earnings and outgo as required under

Section 134(3)(m) of the Companies Act, 2013 read with Rule

8(3) of the Companies (Accounts) Rules, 2014 are given in

Annexure - 2 attached to this Report.

Risk Management

The Company has a robust business risk management

framework to identify and evaluate business risks and

opportunities. This framework aims to create transparency,

minimize adverse impact on the business objectives and

enhance the Company’s competitive advantage. The key

business risks identified by the Company and its mitigation

plans are as under:

a. Fiber Procurement

The Company spends approximately 40% of its total cost

on procurement of fiber viz. casuarina, subabul, mixed

hard wood, eucalyptus etc. Keeping in view the criticality

http://www.ipappm.com/


of this factor, the Company has been expanding farm

forestry program to secure fiber supply.

b. Competition Risk

The paper industry is becoming intensely competitive

with the expansion of capacities by the existing players

and lower import duties. To mitigate this risk, the

Company is leveraging on its expertise and experience

by enhancing its brand equity/visibility and product

portfolio.

c. Occupational Health & Safety (OH&S)

Safety of employees is of paramount importance to

the Company. In order to inculcate safety culture in

the Company, it has identified Occupational Health

& Safety as one of its focus areas. Various training

programs have been conducted at the plants and other

locations. Accountability has been strengthened by

integrating OH&S objectives into job descriptions with

the introduction of management personnel and safety

professionals.

Directors

a. Meetings of the Board

The Company prepares Calendar of Meetings for each

calendar year and circulates the same in advance to all

the Directors. During the year under review, four Board

meetings and four Audit Committee meetings were held.

The details of the meetings held are given in the Corporate

Governance Report forming part of this Report.

b. Non-Executive Directors:

As per the provisions of Companies Act, 2013,

Mr. Russell V. Harris will retire by rotation at the

forthcoming Annual General Meeting and being eligible

offered himself for reappointment.

c. Independent Directors

Pursuant to the Companies Act, 2013 and erstwhile

Listing Agreement the Members, at the 50th Annual

General Meeting held on August 27, 2014, appointed

Mr. Praveen P. Kadle, Mr. Adhiraj Sarin, Ms Ranjana

Kumar, Mr. Milind Sarwate and Mr. M.S. Ramachandran

as Independent Directors of the Company, each for a

term of five years up to March 31, 2019. The tenure of

Independent Directors expired on March 31, 2019.

The Company received communication from Ms Ranjana

Kumar, expressing her unwillingness for reappointment

due to personal commitments. Accordingly, Ms Ranjana

Kumar’s office as an Independent Director of the

Company ceased with effect from closure of business

hours on March 31, 2019. The Board placed on record its

appreciation for her valuable guidance as Independent

Director of the Company.

The Board of Directors at their meeting held on January

30, 2019, based on the recommendation of Nomination

and Remuneration Committee and subject to approval

of members by special resolution, reappointed Mr. M.S.

Ramachandran, Mr. Praveen P. Kadle, Mr. Adhiraj Sarin

and Mr. Milind Sarwate as Independent Directors of the

Company, for a second term of three years effective

April 1, 2019. Further, Mr. M.S. Ramachandran shall

be attaining the age of seventy five years during this

second term and hence approval of members by special

resolution is also being sought for the same, at the

forthcoming Annual General Meeting.

All Independent Directors have given declarations that

they meet the criteria of independence as laid down

under Section 149(6) of the Companies Act, 2013 and

Regulation 16(1)(b) of Securities and Exchange Board of

India (Listing Obligations and Disclosure Requirements)

Regulations, 2015 and that they are independent from

the Management of the Company.

Separate Meetings of Independent Directors were held

on May 2, 2018 and October 24, 2018.

d. Key Managerial Personnel

Mr. Donald P. Devlin, Chairman & Managing Director,

Mr. C. Prabhakar, Company Secretary and Mr. Anish T.

Mathew, Chief Financial Officer are the Key Managerial

Personnel of the Company.

e. Performance Evaluation

Pursuant to the provisions of the Companies Act, 2013

and Regulation 17 of SEBI (Listing Obligations and

Disclosure Requirements) Regulations, 2015, the Board

has carried out the annual performance evaluation of

performance of Board, as well as the evaluation of the

working of its Committees.

A separate exercise was carried out to evaluate the

performance of individual directors including the

Chairman & Managing Director who were evaluated on

parameters such as level of engagement and contribution,

independence of judgment, safeguarding the interests

of the Company and its minority shareholders etc. The

outcome of Board evaluation for the financial year 2018-

19 was discussed by the Board at the Meeting held on

May 2, 2019.

f. Board Training and Induction

At the time of appointing a Director, a formal letter of

appointment is given to him/her, which inter alia explains

the role, function, duties and responsibilities expected

of him/her as a Director of the Company. The Director

is also explained in detail the compliances required from

him/her under the Companies Act, 2013, SEBI (Listing

Obligations and Disclosure Requirements) Regulations,

2015 and other relevant Laws and Regulations. Details

of Familiarization of Directors are disclosed on the

Company’s website.

g. Audit Committee

The Audit Committee as on March 31, 2019 comprised

of Mr. Praveen P. Kadle as Chairman and Messrs. Milind

Sarwate, Adhiraj Sarin and W. Michael Amick Jr. as other

Members. All the recommendations made by the Audit

Committee were accepted by the Board.

Annual Return

In terms of Section 134 of Companies Act, 2013, the Annual

Return for the financial year ended March 31, 2019 is placed

on the website of the Company.

Particulars of Employees

The information required pursuant to Section 197 read with

Rule 5 of the Companies (Appointment and Remuneration of

Managerial Personnel) Rules, 2014 in respect of employees


of the Company, will be provided upon request. The Directors’

Report and Accounts are being sent to the Members

and others entitled thereto, excluding the information on

employees’ particulars which is available for inspection by the

Members at the Registered Office of the Company during

business hours on all working days of the Company up to the

date of the ensuing Annual General Meeting. If any Member

is interested in obtaining a copy thereof, such Member may

write to the Company Secretary at the Registered Office in

this regard.

Vigil Mechanism

The Company has adopted Whistle Blower Policy to deal

with instance of fraud or any unethical or improper practices.

A copy of this Policy is placed on the Company’s website.

Internal Financial Controls

The Company established internal financial control(s)

commensurate with the size, scale and complexity of the

operations. Internal audit function is being handled by a

professional firm of chartered accountants. The main function

of Internal Audit is to monitor and evaluate adequacy of

internal control system in the Company, its compliance with

the operating systems, accounting procedures and policies at

all locations of the Company. Based on the report of internal

audit function, process owners take corrective action in

their respective areas and thereby strengthen the controls.

Significant audit observations and corrective actions are

reported to the Audit Committee.

Statutory Auditors audited the Internal Financial Controls (IFC)

over financial reporting of the Company as of March 31, 2019

in conjunction with audit of the financial statements of the

Company for the year ended on that date. Unmodified opinion

on IFC was given by them.

Statutory Auditors

The Members at the Annual General Meeting held on

August 27, 2014 appointed Messrs Deloitte Haskins &

Sells, Chartered Accountants, Hyderabad, as Auditors of the

Company for a period of five years to hold office from the

conclusion of 50th Annual General Meeting to the conclusion

of the fifth consecutive annual general meeting. The term of

appointment of Messrs Deloitte Haskins & Sells, Chartered

Accountants concludes at this Annual General Meeting.

Pursuant to the provisions of Companies Act, 2013, Messrs

Deloitte Haskins & Sells, Chartered Accountants are eligible

for re-appointment as Statutory Auditors of the Company for a

second term of three years. Messrs Deloitte Haskins & Sells,

Chartered Accountants have provided their consent and also

confirmed their eligibility, for the reappointment.

Re-appointment of M/s. Deloitte Haskins & Sells is being

submitted for approval of the Members at the forthcoming

Annual General Meeting.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies

Act, 2013 and the Companies (Appointment and

Remuneration of Managerial Personnel) Rules, 2014, the

Company had appointed Messrs D. Hanumanta Raju & Co.,

a firm of Company Secretaries in Practice to undertake the

secretarial audit of the Company. Secretarial Audit Report

under Section 204(1) of the Companies Act, 2013 issued

by Messrs D. Hanumanta Raju & Co., Practicing Company

Secretaries in respect of financial year 2018-19 is attached as

Annexure-3 to this Report.

Cost Auditors

In terms of Section 148 of the Companies Act, 2013 read

with the Companies (Audit & Auditors) Rules, 2014, the

Board at their meeting held on May 2, 2019 appointed

Messrs Narasimha Murthy & Co., Cost Accountants as Cost

Auditors of the Company at a remuneration of ` 7.75 lakhs

(excluding applicable taxes) plus reimbursement of travelling

and out-of-pocket expenses on the recommendation of Audit

Committee for the financial year ending March 31, 2020

and their remuneration is submitted for ratification by the

Members at the forthcoming Annual General Meeting.

Cost Accounting Records and Cost Audit

Cost accounting records for the financial year under review

were maintained as per the Companies (Cost Records and

Audit) Rules, 2014. M/s. Narasimha Murthy & Co., Cost

Accountants were appointed as Cost Auditors of the Company

to audit the Cost Records for the financial year ended March

31, 2019. The Cost Audit Report for the financial year ended

March 31, 2018 was filed with the Ministry of Corporate

Affairs in August, 2018.

The Cost Audit Report for the year ended March 31, 2019 will

be filed before September 30, 2019.

Public Deposits

The Company has not accepted any deposits from public

and as such, no amount on account of principal or interest on

deposits from public was outstanding as on the date of the

balance sheet.

Particulars of loans, guarantees or investments

No loans, guarantees, security and investments covered

under the provisions of Section 186 of the Companies Act,

2013 were given during the year under review.

Subsidiary Company

The Company made an investment of ` 5 lakhs by way of

share capital in IP India Foundation, incorporated under

Section 25 of the Companies Act, 1956, wherein the excess

of income over expenditure will be applied for promoting its

objectives. Accordingly, the accounts of IP India Foundation

were not consolidated, since the holding Company will not

derive any economic benefit from its investment in IP India

Foundation. During the financial year ended March 31, 2019,

the Foundation recorded a surplus of ` 20.75 lakhs.

The Company undertakes that annual accounts of IP India

Foundation and the related information will be made available

to the members of holding company seeking such information

at any point of time. The annual accounts of IP India Foundation

are placed on the Company’s website and are also available

for inspection by any Member at the Registered Office of

the Company during business hours on working days of the

Company. Statement containing salient features of the financial

statement of IP India Foundation for the financial year ended

March 31, 2019 is attached as Annexure-4 to this Report.

Material changes and commitments affecting the financial position of the Company which occurred between end of financial year and date of the Report

On May 29, 2019, the promoters of the Company namely

International Paper Investments (Luxembourg) S.A.R.L

and IP International Holdings Inc. holding 21,856,033


equity shares of ` 10 each and 79,71,496 equity shares of

` 10 each respectively, comprising 75% of the issued and

paid up capital of the Company on a fully diluted basis, have

executed a Share Purchase Agreements (“SPA”) with West

Coast Paper Mills Limited (Purchaser) to sell such number of

equity shares of the Company aggregating to a minimum of

51% and up to a maximum of 60% of the issued and paid

up capital of the Company as per the terms and conditions

stated in the SPA.

The aforesaid transaction is subject to receipt of requisite

regulatory approval(s), as applicable.

The Company was a party to Share Purchase Agreement for

the limited purpose of undertaking certain obligations viz.,

carrying business in ordinary course, not to sell business

or assets otherwise than in ordinary case, not to alter the

constitutional documents etc.,

Directors’ Responsibility Statement

The Board of Directors hereby confirms and declares that:

• in thepreparationof finalaccounts for theyearendedMarch 31, 2019 the applicable accounting standards had

been followed;

• theyhadselectedsuchaccountingpoliciesandappliedthem consistently and made judgments and estimates

that are reasonable and prudent so as to give a true and

fair view of the state of affairs of the Company at the

financial year ended March 31, 2019 and of the profit of

the Company for the year;

• they had taken proper and sufficient care for themaintenance of adequate accounting records in

accordance with the provisions of Companies

Act, 2013 for safeguarding the assets of the Company

and for preventing and detecting fraud and other

irregularities;

• they had prepared the accounts for the year endedMarch 31, 2019 on a ‘going concern’ basis;

• they had laid down internal financial controls to befollowed by the Company and that such internal

financial controls are adequate and were operating

effectively;

• theyhaddevisedpropersystemstoensurecompliancewith the provisions of all applicable laws and that such

systems were adequate and operating effectively.

General

• During the year under review, the Chairman &Managing Director of the Company has not received

any remuneration or commission from the subsidiary

company.

• There were no significant material orders passed bythe regulators or courts which would impact the going

concern status of the Company and its future operations.

• TheCompanyhaszerotoleranceforsexualharassmentat workplace and has adopted a policy on prevention,

prohibition and redressal of sexual harassment at

workplace in line with the provisions of the Sexual

Harassment of Women at Workplace (Prevention,

Prohibition and Redressal) Act, 2013 and the Rules

thereunder for prevention and redressal of complaints

of sexual harassment at workplace. Internal Complaints

Committee (ICC) has been set up to redress complaints

received regarding sexual harassment. All women

employees (permanent, contractual, temporary, trainees)

are covered under this policy.

• During the year, one complaint was filed under theSexual Harassment of Women at Workplace (Prevention,

Prohibition and Redressal) Act, 2013 and the respondent

against whom the complaint has been filed has

subsequently resigned from the services of the Company.

Acknowledgements

The Board of Directors wish to place on record their gratitude

to the Central Government, Government of Andhra Pradesh,

Government of Telangana, State Bank of India, Axis Bank

Limited, Citibank N.A., BNP Paribas, JPMorgan Chase Bank

N.A. and Bank of America N.A. for their continued support

during the year.

The Board of Directors wish to convey their thanks to the

valued customers and dealers for their continued patronage

and place on record their appreciation of the contribution

made by all the employees during the year under review.

For and on behalf of the Board

Place: Hyderabad Donald P. DevlinDate: June 30, 2019 Chairman & Managing Director


1. A brief outline of the Company’s CSR policy, including overview of projects or programs proposed to be undertaken and a reference to the web-link to the CSR policy and projects or programs

CSR vision of the Company is to support, enhance and respect the communities, wherever the employees of the Company

live and work. The focus areas of CSR activities are Education, Health & Wellness and Community Engagement which

make positive contributions to communities around the Company’s manufacturing facilities and farm forestry areas. The

Company is continually refining its programs and seeking opportunities to make difference in the communities where

they live and operate.

The CSR policy of the Company sets framework guiding the Company’s CSR activities. A copy of the CSR policy is

uploaded on the Company’s website: www.ipappm.com

2. The Composition of the CSR Committee

In accordance with the provisions of Section 135 of Companies Act, 2013, the Board of Directors constituted Corporate

Social Responsibility Committee. As on March 31, 2019 the Committee comprised of:

1. Mr. M. S. Ramachandran, Non-Executive Independent Director – Chairman

2. Ms Ranjana Kumar, Non-Executive Independent Director – Member

3. Mr. Donald P. Devlin, Chairman & Managing Director – Member

3. Average net profit of the Company for the last three financial years

The average net profits of the Company for the three immediately preceding financial years calculated as specified by the

Companies Act, 2013 for financial year 2018-19 was ` 5,566 lakhs

4. Prescribed CSR expenditure (2% of the amount as in item 3 above)

The prescribed CSR expenditure for the financial year 2018-19 is ` 111.32 lakhs

5. Details of CSR spent during the financial year

(a) Total amount to be spent for the financial year

Total amount spent towards CSR during the financial year 2018-19 was ` 113.79 lakhs

(b) Amount unspent, if any

NIL

(c) Manner in which the amount spent during the financial year is detailed below:

Sl. No.

CSR Project or activity identified

Sector in which the project is covered

Project or programs 1. Local area or other 2. Specify the state and district where projects or programs was undertaken

Amount outlay

(budget) project or program

wise (` lakhs)

Amount spent on the projects or programs Sub-heads 1. Direct

expenditure on projects or programs 2. Overheads (` lakhs)

Cumulative expenditure

upto the reporting period (`

lakhs)

Amount spent direct or through

implementing agency

1. Health and wellness

- Safe Drinking

Water

Eradication

of Hunger

and Poverty

and making

available

Safe Drinking

Water

a) Installation of Safe Drinking

Water Plants to Communities

in Villages Kadiam,

Bhopalapatnam, Sampath

Nagar and Dowleswaram in

Andhra Pradesh

10.00 10.25 10.25 Direct

b) Continue to provide water

through tankers to the

Communities in Katheru

Village including maintenance

of Safe Drinking water plants

9.00 9.50 9.50 Direct

c) VRO plant maintenance in

Venkatanagaram

2.50 2.50 2.50 Direct

2 Health and wellness

- Infrastructure

support

Promoting

health care

including

preventive

health care

Infrastructure support viz., building

and OP Waiting area, repairs &

painting of the OP Wing, other

amenities viz., Dental Chair, Cold

Storage for medicines, washing

machine were provided to the

Community Health Center at

Kadiam village

5.00 5.00 5.00 Direct

3 Health and wellness

- Infrastructure

support

Promoting

health care

including

preventive

health care

Provided an X Ray machine to 50

bedded ESI Hospital/ Rajahmundry

town

9.00 9.00 9.00 Direct

ANNEXURE-1Annual Report on Corporate Social Responsibility activities

http://www.ipappm.com


Sl. No.

CSR Project or activity identified

Sector in which the project is covered

Project or programs 1. Local area or other 2. Specify the state and district where projects or programs was undertaken

Amount outlay

(budget) project or program

wise (` lakhs)

Amount spent on the projects or programs Sub-heads 1. Direct

expenditure on projects or programs 2. Overheads (` lakhs)

Cumulative expenditure

upto the reporting period (`

lakhs)

Amount spent direct or through

implementing agency

4 Education –

• Scholarship

• Training

• Infrastructure

Promoting

Education

a) Project new horizons

(spoken English classes

for classes IX and X to the

students of 12 Government

Schools in Rajahmundry

town; IP Scholarships merit

based scholarships to 120

students who passed class X

from Government Schools

17.50 17.50 17.50 Direct and

through IP India

Foundation

which was set

up in 2013 to

undertake CSR

activities

b) Teacher training for 100

primary school teachers

of Rajahmundry rural and

Kadiam Mandal

1.50 1.50 1.50 Direct

c) School Infrastructure:

Providing furniture to

Girijana Vikas Kendram

(Tribal Residential School),

Construction of Girls Toilets

in Kadiyam Upper Primary

School; construction of dining

shed at Kadiyam Upper

Primary School

14.50 14.50 14.50 Direct

5 Community

Engagement-

Empowering

women, rural

development and

contributing to

approved funds

Promoting

gender

equality,

empowering

women, Etc.

a) Tailoring Centers for

women in Mallayya Peta,

Rajahmundry in Kadiam

Village

3.00 3.00 3.00 Direct

Rural

development

projects

b) Construction of Bus Shelter

at Kadiyam village

4.00 4.00 4.00 Direct

Miscellaneous

CSR

expenditure

c) Other volunteer activities and

CSR expenditure

1.49 3.21 3.21 Direct

Ensuring

environmental

sustainability

and ecological

balance

d) Donation to Chief Minister’s

Distress Relief Fund – Kerala

Floods

10.00 10.00 10.00 Direct

Measures for

the benefit of

armed forces

veterans,

war widows

and their

dependents

e) Donation to CRPF Martyrs of

Pulwama

10.00 10.00 10.00 Direct

6 Donation to

IP India Foundation,

100% subsidiary

of the Company

(incorporated for the

purpose of carrying

on charitable

activities)

Contribution

to corpus

of Section 8

Company.

To carry on CSR activities on behalf

of the Company

13.83 13.83 13.83 Direct

Total 111.32 113.79 113.79

(d) In case the Company has failed to spend the 2% of the average net profits of the last three financial years or any part thereof, the Company shall provide the reasons for not spending the amount in its Board report.

Not Applicable

(e) A responsibility statement of the CSR Committee that the implementation and monitoring of CSR Policy, is in compliance with CSR objectives and Policy of the Company.

The CSR Committee hereby confirms that the implementation and monitoring of CSR activities is in compliance with

CSR objectives and the CSR Policy of the Company.

Donald P. Devlin M.S. RamachandranChairman & Managing Director Chairman, CSR Committee

M. . amachandran


ANNEXURE-2CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO[Section 134(3)(m) of The Companies Act, 2013 read with Rule 8(3) of The Companies (Accounts) Rules, 2014]

(A) Conservation of energy-

I. The steps taken or impact on conservation of energy:

• Steam Trap Functioning Improvement

• Insulation audit conducted and provided Insulation.

• Replacing WBL Pump1 Motor with 37kW Energy savings of 20 KW achieved by replacing 55KW motor with

37KW as per the process requirement. Project commissioned in October 2018.

• Replacing Conventional Light fixtures of Paper machine 2,3,5, zero meters.

• Replacing all conventional light fixtures mill wide with LED light fixtures to improve lighting levels as per

standards to achieve savings of 5KW. Project under execution.

• Entire plant Thermal Audit was done with M/S Forbes Marshall. Audit points implementation feasibility is in

progress.

• Vacuum pump overhauled in KA#1 & 2 machine and stopped extra vacuum pump. Savings of 120 kW is

achieved.

• Turbine frequency was reduced from 50 Hz to 49.6 Hz.

• Air leak survey conducted and 85% of the leakage arrested.

• Steam leakage survey conducted and 100% leakage arrested.

• Grid and TG power factor improvement by installing capacitor banks throughout the mill by Aug 2019, which

gives 40 kW savings.

• Inefficient and multi rewound motor replacement is in progress. Energy saving expected is 30 kW. Project will

be completed by April 2020.

II. The steps taken by the company for utilising alternate sources of energy:

PG gas plant restarted to reduce furnace oil consumption.

III. The capital investment on energy conservation equipments:

• VFD for clear water pump

• Heat exchanger for black liquor

• Inefficient low PF slip ring TDR motor was replaced with High efficiency IE3 squirrel gauge motor in Feb 2019.

Savings of 20 kW.

• VFD provided for Fresh water pump.KA#3 No-5 vacuum pump motor was replaced with IE3 energy efficient

motor. Savings of 10 kW.

• RJ5 Paper machine DC to AC drives replacement along with Silent Drives

(B) Technology absorption-

I. Efforts made towards technology absorption:

• Tanks Integrity at 4F evaporator

Tanks modification and replacements are completed and commissioned in Feb 2018.

• Reel TurnUp Systems for RJ-2, RJ-3, RJ-5

Adopted Reel Turnup systems for RJ-2,3,5 paper machines for safe operation and to reduce the reel turn up

time.

• RB4 Primary Airport Modification

Primary Airports modification done for better primary air velocity and for better black liquor combustion in July

2018.

• Old PLC upgradation in RJ 1 to 5

Replaced and commissioned obsolete operating systems, PLC, software of RJ 1 to 5 and central refiner in

September 2018.


• RJ5 Paper machine DC to AC drives replacement along with Silent Drives

Improving machine runnability by addressing several reliability issues & constraints, DC drives replaced with AC

drives. Project completed and commissioned in September 2018.

• RJ3 COL System Modification

Provided rotameters and continuous monitoring system for all roll bearing of RJ3 for improving reliability, all

equipment installed and commissioned in September 2018.

• Double Doctor for RJ#5 Pick up Roll

Replaced existing single doctor to double doctor to avoid water carry over and to improve dryness of web.

• Refiner for RJ5 paper machine

Brushing Refiner provided for RJ5 machine for Ash percentage improvement, project installed and commissioned

in September 2018.

• Start-up burners for RLK-1 & 2

Eliminated hand torch for light up of Startup Burners of Recovery Boiler#4, RLK-1&2 by replacing with gas based

pilot burner and Oil Burners and incorporated with the BMS PLC system as per IP Orange Book guidelines.

II. Benefits derived like product improvement, cost reduction, product development or import substitution:

• Production improvement in RJ#5

• Roll change time reduced

• Improved Ash% in RJ#5

• Better Reliability at RJ#3

• Reduction in Power Consumption

III. In case of imported technology (imported during the last three years reckoned from the beginning of the financial

year)

1 a. Details of technology imported DCS Upgradation of obsolete servers - Upgradation

of ABB DCS by replacing Windows Server 2003 with

Windows XP with Windows Server 2012 and Windows

2008 Operating Systems with latest version 800xA 6.0

advanced controllers supplied by ABB Singapore

b. Year of import 2016

c. Has the technology been fully absorbed? Technology has been fully absorbed

d. If not fully absorbed, areas where

absorption has not taken place, and the

reasons thereof

Not applicable

2 a. Details of technology imported KA#3 Drives Upgradation - Upgrading the existing

obsolete & outdated DCV 700 Model DC drive system

to new ACS 800 MODEL AC drive system on KA3

Machine by ABB, Singapore (Thru Benguluru)





reasons thereof

Not applicable

3 a. Details of technology imported LVHC System Upgradation - (Foul odor control in RJY

Unit) - System upgradation to effective collection of

high concentrated foul gases from evaporator area and

to burn in lime kilns to meet PCB norms of ambient

air quality. To reduce effluent load from evaporator

by reduction of methanol to 95% and H2S to 98%

adopting technology from Lundberg, USA





reasons thereof

Not applicable


4 a. Details of technology imported QCS for RJ#6 - Replacement of obsolete QCS system in RJ#6 for improving quality measurement form M/s

Honeywell, Singapore





reasons thereof

Not Applicable

5 a. Details of technology imported Installation of New Reel Turn-up Systems at RJ-2, RJ-3

& RJ-5 for reducing wastages & Operator Safety.

All equipment & consumables from IBS, Austria.


c. Has the technology been fully absorbed? Technology has been fully absorbed.



reasons thereof

Not Applicable

6. a) Details of technology imported Reel turn up system for RJ2,3&5:

To avoid manual intervention in reel change at paper

machines we have provided automatic reel change

keeping man away from rotating equipment. Apart from

safe operation it gives easier operation, and wrinkle free

sheet transfer. Technology was imported from M/s IBS,

Austria

b) Year of import 2018

c) Has the technology been fully absorbed? Yes

d) If not fully absorbed, areas where


reasons thereof

Not Applicable

7. a) Details of technology imported Double Doctor for RJ5 pick up roll: Replaced existing

single doctor to double doctor to avoid water carry over

and to improve dryness of web. Technology imported

from M/s IBS, Austria




absorption has not taken

place, and the reasons thereof

Not Applicable

8. a) Details of technology imported Andritz burner for RB#4, RLK1&2: Eliminated hand

torch for light up of Startup Burners of Recovery

Boiler#4, RLK-1&2 by replacing with gas based pilot

burner and Oil Burners and incorporated with the

BMS PLC system as per IP Orange Book guidelines.

Technology imported from M/s Andritz, Finland.




absorption has not taken

place, and the reasons thereof

Not Applicable


Research and Development

Specific Area in which R&D carried

out by the company

New Product Developed (Poster 50 gsm at RJ#4, Cup stock at RJ#2 and KA#2, HP

Copier 70 gsm at RJ#6 and surface coated reflection 100 gsm at RJ#6, Star white 50

gsm at KA#1, Maplitho RS with DIP at KA#3, Skytone and high bright Star white at

KA#3)

Product Quality Improvement (CD profile for gsm and caliper at RJ#2, Roughness

reduction at RJ#2, Abrasion reduction in Blade Wrapper, Static charge reduction in

RJ#5, Dye spot defect reduction at RJ#6, Dye spot defect reduction at KA1&2)

Process optimization (Wood Chips size optimization, Do pH optimization, Central

Refiner Control Strategy, uniform furnish mix in KA#3, Uniform consistency at KA#2,

Reduction in GSM variation at KA#2, filter oil from contamination of debris and

moisture)

Plant Trial for Cost Reduction (Anionic retention aid at RJ#3&5 and KA#3,

Oxidizing Biocide and deposit control on RJ#3, Pigment Dyes at RJ#6, Drainage aid

at Ecell, DSR with regular maize starch in place of imported cationic starch, Onsite

modification of native starch into cationic starch, Oxy bleach booster, Peroxy Bleach,

Descaling Chemical at paper machines, Sizing Chemical at KA#1,2&3)

Benefits arrived as a result of R&D – New products developed as per market demand.

– Modification of products for Customer satisfaction.

– Plant Efficiency and uptime increased

– Identification of additives for quality Improvement and cost reduction.

Future Plan of Action Product Development ( 65 GSM in Copier, High Bulk Qualities, Sublimission Paper

etc.)

Quality Improvement (Bulk Improvement, Caliper Variation Reduction, GSM CD

profile variation reduction, roughness reduction and Reel Build up)

Process Optimization (ClO2, H2O2 and NaOH optimization, Green Liquor Dregs

Sludge Dryness improvement, GCC to PCC replacement, Refiner bar pattern and

design modification to Reduction SEL, Size press surface filling for ash improvement,

Reduction in Piping and hard band by Stretched wrapping)

Plant Trial for Cost Reduction (ClO2 Booster trial to reduce ClO2 Consumption,

Bulk Improvement Chemical Trial, Sodium Per carbonate in place of H2O2)

(C) Expenditure incurred on Research and Development: (` in lakhs)

a. Capital -

b. Recurring 38.10

c. Total 38.10

(D) Foreign exchange earnings and Outgo (` in lakhs)

Foreign Exchange earned in terms of actual inflows 21,634.80

Foreign Exchange outgo in terms of actual outflows 3,413.38


To

The Members,

INTERNATIONAL PAPER APPM LIMITED,Rajahmundry – 533 105,


Andhra Pradesh.

We have conducted the Secretarial Audit of the compliance

of applicable statutory provisions and the adherence to good

corporate practices by International Paper APPM Limited

(hereinafter called the Company). Secretarial Audit was

conducted in accordance with the guidance note issued

by the Institute of Company Secretaries of India and in a

manner that provided us a reasonable basis for evaluating the

corporate conducts/statutory compliances and expressing

our opinion thereon.

Based on our verification of the Company’s books, papers,

minute books, forms and returns filed and other records

maintained by the Company and also the information

provided by the Company, its officers, agents and authorized

representatives during the conduct of Secretarial Audit, we

hereby report that in our opinion, the Company has, during the

audit period covering the financial year ended on March 31,

2019, complied with the statutory provisions listed hereunder

and also that the Company has proper Board processes and

compliance mechanism in place to the extent, in the manner

and subject to the reporting made hereinafter:

We have examined the books, papers, minute books,

forms and returns filed and other records maintained by the

Company for the financial year ended on March 31, 2019,

according to the provisions of:

(i) The Companies Act, 2013 (the Act) and the rules made

thereunder;

(ii) The Securities Contracts (Regulation) Act, 1956 (‘SCRA’)

and the rules made thereunder;

(iii) The Depositories Act, 1996 and the Regulations and

Bye-laws framed thereunder;

(iv) Foreign Exchange Management Act, 1999 and the

rules and regulations made thereunder to the extent of

Foreign Direct Investment, Overseas Direct Investment

and External Commercial Borrowings;

(v) The following Regulations and Guidelines prescribed

under the Securities and Exchange Board of India Act,

1992 (‘SEBI Act’):-

(a) The Securities and Exchange Board of India

(Substantial Acquisition of Shares and Takeovers)

Regulations, 2011;

(b) The Securities and Exchange Board of India

(Prohibition of Insider Trading) Regulations, 2015;

(c) The Securities and Exchange Board of India (Issue of

Capital and Disclosure Requirements) Regulations,

ANNEXURE-3Form No. MR-3SECRETARIAL AUDIT REPORTFOR THE FINANCIAL YEAR ENDED 31.03.2019[Pursuant to Section 204(1) of the Companies Act, 2013 and Rule 9 of the Companies

(Appointment and Remuneration of Managerial Personnel) Rules, 2014]

2009 - (Not applicable to the Company during the

period of audit);

(d) The Securities and Exchange Board of India

(Employee Stock Option Scheme and Employee

Stock Purchase Scheme) Guidelines, 1999 - (Not

applicable to the Company during the period of

audit);

(e) The Securities and Exchange Board of India (Issue

and Listing of Debt Securities) Regulations, 2008 -

(Not applicable to the Company during the period of

audit);

(f) The Securities and Exchange Board of India

(Registrars to an Issue and Share Transfer Agents)

Regulations, 1993 regarding the Companies Act

and dealing with client;

(g) The Securities and Exchange Board of India

(Delisting of Equity Shares) Regulations, 2009 -

(Not applicable to the Company during the period of

audit);

(h) The Securities and Exchange Board of India

(Buyback of Securities) Regulations, 1998 - (Not

applicable to the Company during the period of

audit); and

(i) The Securities and Exchange Board of India

(Listing Obligations and Disclosure Requirements)

Regulations, 2015

(vi) Other laws specifically applicable to the Company

include:

A. Indian Boilers Act, 1923

B. The Environment (Protection) Act, 1986 and allied

Environment Laws

C. Contract Labour Act, 1971 and A.P Contract Labour

Rules

We have also examined compliance with the applicable

clauses of the following:

(i) Secretarial Standards issued by The Institute of Company

Secretaries of India.

(ii) The Listing Agreements entered into by the Company

with BSE Limited and National Stock Exchange of India

Limited;

During the period under review, the Company has complied

with the provisions of the Act, Rules, Regulations, Guidelines,

Standards, etc. mentioned above.

We further report that

The Board of Directors of the Company is duly constituted

with proper balance of Executive Directors, Non-Executive

Directors and Independent Directors. The changes in the


composition of the Board of Directors that took place during

the period under review were carried out in compliance with

the provisions of the Act.

Adequate notice is given to all directors to schedule the

Board Meetings, agenda and detailed notes on agenda were

sent at least seven days in advance, and a system exists for

seeking and obtaining further information and clarifications

on the agenda items before the meeting and for meaningful

participation at the meeting.

Majority decision is carried through while the dissenting

Board members’ views, if any, are captured and recorded as

part of the minutes.

We further report that there are adequate systems and

processes in the Company commensurate with the size and

operations of the Company to monitor and ensure compliance

with applicable laws, rules, regulations and guidelines.

We further report that company has subscribed to an

Online Compliance Management System whereby system

generated reports are submitted quarterly to the members

of the Board about any non-compliance and delayed

compliance, if any, with respect to all laws and rules that

are applicable to the Company. The Board in their meetings

takes note of this report and suggests corrective action if

deemed necessary.

We further report that Company had filed a Scheme of

Arrangement before the Hon’ble High Court of Andhra

Pradesh and Telangana to reclassify and transfer the amount

of ` 288.76 Crores lying to the credit of ‘General Reserves’

to ‘Profit and Loss Account’ of the Company under the

terms of the Scheme. After constitution of Hon’ble National

Company Law Tribunal this matter has been transferred

to Hon’ble National Company Law Tribunal, Hyderabad

Bench at Hyderabad. After consideration of the scheme

Hon’ble National Company Law Tribunal has vide its order

dated 16.11.2018 granted approval to the said scheme of

arrangement as proposed by the company.

We further report that the Company received notices from

BSE Limited and National Stock Exchange of India Limited in

November, 2018, levying fine for non-compliance of Regulation

18 of SEBI (Listing Obligations and Disclosure Requirements)

Regulations, 2015 (LODR Regulations) in respect of

composition of Audit Committee in the Corporate Governance

Report submitted for the quarter ended September 30, 2018.

The Company replied to the above stock exchanges stating

that the Company constituted the Audit Committee as per

LODR Regulations and hence fully complied with Regulation

18 of SEBI (Listing Obligations and Disclosure Requirements)

Regulations, 2015 as this Regulation does not specify that any

fraction of a number while computing the composition need

to be rounded off to as one. Based on the above grounds

the Company also filed a writ petition vide No. 44910 of

2018 before Hon’ble High Court of Judicature at Hyderabad

for the States of Telangana and Andhra Pradesh (Court) and

the Hon. Court passed an Order dated December 11, 2018

in IA No. 1 of 2018 in W.P. No. 44910 of 2018 directing the

Stock Exchanges not to take any coercive steps against

the Company. Further, as a measure of Good Corporate

Governance, the Audit Committee of the Company has been

voluntarily reconstituted by the company with effect from

January 30, 2019, comprising of three independent Directors

and one Non-Executive Director.

We further report that during the audit period, the Company

has no specific events / actions having a major bearing on

the Company’s affairs in pursuance of the above referred

laws, rules, regulations, guidelines, standards, etc. referred

to above.

For D. HANUMANTA RAJU & COCOMPANY SECRETARIES

Place: Hyderabad CS D. HANUMANTA RAJUDate: April 30, 2019 PARTNER FCS: 4044, CP NO: 1709


This report is to be read with our letter of even date which is annexed as Annexure A and forms an integral part of this report.

‘Annexure A’

To

The Members,

INTERNATIONAL PAPER APPM LIMITED,Rajahmundry – 533 105,


Andhra Pradesh.

Our report of even Date is to be read along with this letter:

1. Maintenance of Secretarial Records is the responsibility of the management of the Company. Our responsibility is to

express an opinion on these Secretarial Records based on our Audit.

2. We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the

correctness of the contents of the Secretarial Records. The verification was done on test basis to ensure that correct

facts are reflected in Secretarial Records. We believe that the processes and practices we followed provide a reasonable

basis for our opinion.

3. We have not verified the correctness and appropriateness of financial records and Books of Accounts of the Company.

4. Wherever required, we have obtained the Management Representation about the compliance of laws, rules and

regulations and happening of events etc.

5. The compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards is the responsibility

of management. Our examination was limited to the verification of procedures on test basis.

6. The Secretarial Audit Report is neither an assurance as to the future viability of the company nor of the efficacy or

effectiveness and with which the management has conducted the affairs of the Company.

For D. HANUMANTA RAJU & COCOMPANY SECRETARIES

Place: Hyderabad CS D. HANUMANTA RAJUDate: April 30, 2019 PARTNER FCS: 4044, CP NO: 1709


Part “A”: Subsidiaries

(Information in respect of each subsidiary to be presented with amounts in Rupees)

Name of the subsidiary IP India Foundation

Reporting period for the subsidiary concerned, if different from the holding

company’s reporting periodNot Applicable

Reporting currency and Exchange rate as on the last date of the relevant financial

year in the case of foreign subsidiaries.Not Applicable

Share capital ` 500,000

Reserves & surplus ` 46,15,489

Total assets ` 52,21,989

Total Liabilities ` 52,21,989

Investments ` 15,75,000

Turnover ` 43,21,909

Excess of income over expenditure before taxation ` 20,74,603

Provision for taxation ` NIL

Excess of income over expenditure before taxation ` 20,74,603

Proposed Dividend Not applicable

% of shareholding 100

There is no other subsidiary company except IP India Foundation.

For and on behalf of the Board

Hyderabad Donald P. DevlinJune 30, 2019 Chairman & Managing Director

ANNEXURE-4Form AOC- IPursuant to first proviso to Sub-Section (3) of Section 129 read with Rule 5 of Companies (Accounts) Rules, 2014

Statement containing salient features of the financial statement of Subsidiaries/associate companies/joint ventures

onald evlin


MANAGEMENT DISCUSSION & ANALYSIS

Forward looking statements

In this Annual Report, we have disclosed forward looking

information to enable investors to comprehend our prospects

and take informed investment decisions. This report and other

statements - written and oral - that we periodically make,

contain forward looking statements that set out anticipated

results based on the management’s plans and assumptions.

We have tried wherever possible to identify such statements

by using words such as ‘anticipate’, ‘estimate’, ‘expects’,

‘projects’, ‘intends’, ‘plans’, ‘believes’, and words of similar

substance in connection with any discussion of future

performance.

We cannot guarantee that these forward looking statements

will be realized, although we believe we have been prudent

in assumptions. The achievement of results is subject to

risks, uncertainties and even inaccurate assumptions. Should

known or unknown risks or uncertainties materialize, or should

underlying assumptions prove inaccurate, actual results could

vary materially from those anticipated, estimated or projected.

Readers should bear this in mind.

We undertake no obligation to publicly update any forward

looking statements, whether as a result of new information,

future events or otherwise.

OPERATING ENVIRONMENT

Indian Economy, Global Paper Industry & Indian Paper Industry

Indian Economy

Indian economy grew at 6.8 per cent in 2018-19. This is the

lowest growth outturn in five years. The slowdown over the

past year has been driven by steadily cooling activity in the

manufacturing sector and, to a lesser extent, agriculture.

Weaker momentum has been mainly domestically driven.

While lead indicators suggests that the growth will remain

subdued in the near term, monetary and regulatory easing

from the RBI, along with a recovery in portfolio inflows,

should support a recovery in credit to the private sector and

reverse the drag from the negative credit impulse.

The demand drivers for paper comes from a combination of

factors, mostly GDP driven, such as emerging middle class

(increased spending on books, magazines and commercial

papers), access to education, digital drive (Broadband and

smartphones penetration) leading to higher use of computers

and printers and online shopping (e-commerce).

Global Paper Industry

Globally over 400 million MTs of paper and paper products

are consumed. The world’s three largest paper producing

countries are China, the United States, and Japan (these

three countries account for approximately half of the world’s

total paper production), while India accounts for a small but

growing share of the global market. The global paper and

pulp industry has contracted slightly over the past five years,

primarily due to disrupting technology, and shift in customer

demand. However, the decline in growth in developed

markets are expected to be offset by the demand growth in

India, Middle East, Africa and Asia.

Indian Paper Industry

The domestic demand of paper and packing is ~14 million MTs,

which accounts for ~4% of the world’s consumption.

The paper industry is classified into four segments viz.,

Packaging, Paper and Boards, Printing and Writing, News

print and speciality papers. The Printing and Writing segment

is ~4.5 metric tonnes (30% of industry size) and is growing

at a healthy rate of ~4%. The Indian paper industry is highly

fragmented with ~750 paper mills, of which top 10 producers

account for 48% of capacity.

Outlook

The Indian economy is growing at a faster rate than other

economies and GDP growth in India, in long term, is expected

to exceed other Asian and Western European economies.

The per capita consumption of paper in India is ~10 Kg as

against a global average of ~56 kg. The emerging middle

class will also drive paper consumption as the middle class

spending increases. Books and magazines will become more

accessible to people; increase in retail activity will further

stimulate advertising.

The demand for paper is largely driven by:

· Education: Efforts to improve the primary and higher

education is driving the students enrolment and

continuance of education.

· Offices: Printing paper usage for legal and formal

documents, sticky work habits favouring paper.

· E-commerce: Internet penetration is creating new

business models and demand for industrial packaging,

consumer packaging and printing & writing paper.

· Economic activity: The increase in economic activity

is expected to open up more avenues (Manufacturing

sector, Office space) for paper demand.

· Demographics and economy: Increased literacy

rate, telecom penetration and emerging middle class

increased spending on books, magazines, online

shopping, fast food consumption, pro- environment

choices (plastic ban)

· Consumerism: Higher disposable income coupled with

urbanisation is expected to drive new and different

consumer behaviours and drive demand for paper

products.

As per the industry estimates, Printing and Writing segment

demand is expected to grow at a CAGR of ~4% and packaging

at a CAGR of 5-6%.

As the Indian economy further develops, end-uses are

foreseen to move towards the structures of Europe and

North America. The paper consumption habits are gradually

expected to change in India in the longer term, with gradually

strengthening impact of substitution levers, and digitalization

being the main countertrend softening the demand growth.

Major Industry Challenges

Access to quality and cost competitive raw material

India is a wood-fibre deficient country as the Government

of India does not permit industrial plantations in the country.


Inadequate raw material availability domestically is a major

constraint for the paper industry. Additionally, the recovery

rate of wastepaper in India is quite low (~30%) due to

lack of an effective collection mechanism. With issues like

availability of quality raw material at competitive prices, many

players depend on the imports of pulp, wastepaper and even

pulpwood to meet their raw material needs and often have to

pay premium for availing them thereby impacting profitability

and capacity addition.

IP APPM has implemented a farm-forestry strategy that

collaborates with private nurseries and research organisations,

develops free saplings in partnership with farmers to sustain

100% consistent supply of Company’s fiber needs with a long

term vision to bring down haulage radius from present up to

300 Km to within 150 km from mills in the state of Andhra

Pradesh. Our Farm forestry program has led to the plantation of

2.5 million high yielding Casuarina clones, along with 32 million

Casuarina seedlings within 150 km radius of the mill. This

covered 3,834 hectares of plantation and generated 1.92 million

man-days of employment for farmers. The Company’s strategy

to reduce distance of fiber procurement area has helped in

stabilizing the price of virgin fiber during 2018-19.

Imports of paper and paperboard

Imports of paper and paperboard from ASEAN countries

(Import duty at 0%) pose a challenge to India paper industry.

The Indian government implemented an anti-dumping duty

on uncoated freesheet copy paper to prevent dumping of

low priced imports to the Indian market. The anti-dumping

duty has helped to ensure a competitive price for copy

paper imports thus normalizing the supply demand balance.

The action by the government and diversion of surplus

capacity (ASEAN paper manufacturers) to meet Chinese

demand led to moderation of imports into India for the

financial year 2018-19.

ABOUT IP APPM

About IP APPM, Strategy, competitive strengths, products

and manufacturing.

International Paper APPM Limited (formerly known as The

Andhra Pradesh Paper Mills Limited) is one of the largest

integrated paper and pulp manufacturers in India. The

Andhra Pradesh Paper Mills Limited was established in the

year 1964. In 2011, the Andhra Pradesh Paper Mills Limited

was acquired by International Paper (IP), a USD 23 billion

American packaging, pulp and paper company founded in

1898. In the first significant domestic acquisition by a foreign

paper company, IP bought 75% stake in the Company.

IP, headquartered in Memphis, Tennessee, USA is the largest

packaging, pulp and paper company in the world, with

approximately 53,000 employees operating in 24 countries.

In December 2013, the Company was renamed as

International Paper APPM Limited. The name change was

intended to recognize the parentage of International Paper,

while maintaining the link to the history and positioning of the

Andhra Paper brand.

On May 29, 2019, the promoters of the Company namely

International Paper Investments (Luxembourg) S.A.R.L and

IP International Holdings Inc. holding 2,18,56,033 equity

shares of ` 10 each and 79,71,496 equity shares of ` 10

each respectively, comprising 75% of the issued and paid up

capital of the Company on a fully diluted basis, have executed

a Share Purchase Agreement (“SPA”) with West Coast Paper

Mills Limited (Purchaser) to sell such number of equity shares

of the Company aggregating to a minimum of 51% and up to

a maximum of 60% of the issued and paid up capital of the

Company as per the terms and conditions stated in the SPA.

The aforesaid transaction is subject to receipt of requisite

regulatory approval(s), as applicable.

IP APPM is focused on serving customers with high quality

printing and writing papers.

IP APPM is also focused on people safety, efficiency

enhancements and social and community programs backed

up with its own pioneering work in raw material generation

through social farm forestry. Across the Company, there is a

strong strategic focus to drive future growth through building

on the organization strengths to produce the highest in quality,

ramping up of volumes and be a cost effective producer of

paper.

The Company has always been conscious of its corporate

responsibilities and follows a strict environmental policy.

Investments continue to be made in achieving benchmarks

to remain ahead of compliance standards. Such efforts

have helped protect and regenerate the natural resources,

conserve energy and water, improve productivity and set a

good environmental track record at the mills.

Products

The Company produces writing, printing and cut-size papers

for foreign and domestic markets and offers a wide range

of high quality specialty grade products for a diverse range

of applications. These products are designed to provide

outstanding performance, functional excellence and

exceptional finish quality.

The well-known cut-size papers of the Company offer a wide

range of office documentation and multipurpose papers,

from economy to premium grades, ideal for both home

and commercial use. The papers are available in best-in-

class brightness and produced with elemental chlorine free

(ECF) pulp technology. The range is perfect for high volume

photocopying and high-quality color printing needs and

engineered to run flawlessly on all types of photocopiers,

laserjet and inkjet printers, fax machines and multi-functional

devices.

Manufacturing

Our Rajahmundry Mill is an integrated wood based paper

mill with a rated capacity to produce 177,000 MT of finished

paper and 191,000 MT of bleached pulp annually. The unit

manufactures uncoated writing and printing paper - mainly

cut-sizes, industrial grade papers and posters using Casuarina,

Eucalyptus and Subabul as main sources of pulp wood.

Our Kadiyam Mill has a rated capacity to produce 71,000 MT

per annum of finished paper such as cream wove, azurelaid,

colored cut-sizes and industrial grade papers using recycled

fiber and purchased pulp as base raw materials.

The Company holds ISO 14001, ISO 9001 and OHSAS 18001

certifications as well as the Forest Stewardship Council

(FSC) Chain Of Custody (COC) certification. The company

has embarked on a journey to upgrade from OHSAS 18001


system to ISO 45001, for which certification process is

underway.

The paper industry is capital intensive with a large gestation

period. Payback is partly earned through better product

characteristics and value realization and partly by improving

productivity. In its endeavor to match global standards,

IP APPM has invested in environment friendly technologies

that facilitate increasing the overall quality of products and

demonstrating productivity gains. In addition, IP APPM has

invested in technology to reduce water consumption, energy

consumption and control air emissions.

All the investments are directed to improve the systems and

processes to ensure consistent pulp quality with high strength

properties, low consumption of utilities and chemicals and

offer economies of scale. The Company has improved the

economics of production in the mill and exceeded current

environmental norms applicable in the country.

REVIEW OF OPERATIONS

The Company’s operations strategies are aimed at enhancing

the overall performance. During the year the Company further

scaled up its customer support processes and systems to

add excellence in delivery. This helped serve the customer

better, improve customer satisfaction and retain and attract

more customers.

During the year, the company recorded the highest ever sales

volume which grew by 3.4% to 238,729 MT, as compared to

230,894 MT in 2017-18. Of the revenues, 16% were from

exports (previous year 19%) with domestic sales accounting

for the balance 84%.

IP APPM also recorded highest ever production of 238,724

MT of paper in the year ended March 2019 as against 228,900

MT in 2017-18. Capacity utilization remained above 99 %

during the year.

We started our Manufacturing Excellence (ME) initiatives

in the year 2013. Our continued and consistent efforts

in implementing and executing the programme helped

in improving pulp productivity and overall paper machine

efficiency (OME). The Company also made significant gains

in fiber, energy and chemical costs. As in the earlier years,

deliberate and continuous efforts were made to become a

low cost producer, raising the operating efficiencies and

optimizing material consumption. Overall, the Manufacturing

Excellence initiatives helped improve the mill reliability,

increase the productivity, reduce the overall cost and improve

profitability.

While focussing on improving the reliability, our initiatives in

production planning and scheduling helped secure continuous

runs and lower down time. This helped improving our On –

Time – In – Full (OTIF) performance above 92% and delight

our customers.

FINANCIAL PERFORMANCE

In FY19, the Company recorded highest ever revenue and

profits. Revenue from operations improved by 12% while

EBITDA registered an increase of 71%. These results

were driven by higher sales volume, higher selling prices,

record production levels, improved efficiency and lower

manufacturing cost. Profit after tax improved by 140%

supported by 67% lower finance cost.

The Company generated 37% higher cash from operations

at ` 294 crore in the year under review as compared to

` 215 crore in 2017-18. The company is debt free and ended

the year with cash surplus of ` 86 crores. The surplus cash

is invested in fixed deposits and inter corporate deposits.

The net profit for the year was ` 200 crore as compared to

` 83 crore reported in the previous year.

Financial Ratios

S.No RatioMarch

31, 2019March 31,

2018

1 Debtors Turnover Ratio in

days (Net sales/Average

Receivables)

20.00 19.00

2 Inventory Turnover Ratio in

days (Sales/Inventory)

9.00 8.00

3 Interest Coverage Ratio

(EBIT/Interest Expenses)

40.61 5.99

4 Current Ratio (Current

asset/Current Liabilities)

1.52 0.80

5 Debt Equity Ratio

(Debt /Equity)

0.02 0.37

6 Operating Profit Margin %

(Operating profit/Sales)

22.41 11.92

7 Net Profit Margin % (PAT/

Sales)

14.02 6.49

8 Return on Net Worth %

(Net Earnings/Networth)

26.19 14.73

The Company has maintained a healthy capital structure as

is evident from its debt to equity ratio. Improved business,

optimisation of operating costs and lower finance costs

resulted in improved net margins and consequently improved

return on net worth.

Internal Financial Controls

The management of IP APPM is responsible for establishing

and maintaining adequate internal controls over financial

reporting. Internal controls over financial reporting is the

process designed by, or under the supervision of, our

Chairman & Managing Director and Chief Financial Officer,

and effected by our Board of Directors, Audit Committee,

management and other personnel to provide reasonable

assurance regarding the reliability of financial reporting and

the preparation of financial statements for external purposes.

All internal control systems have inherent limitations,

including the possibility of circumvention and overriding of

controls, and therefore can provide only reasonable assurance

of achieving the designed control objectives. The Company’s

internal control system is supported by written policies and

procedures, contains self-monitoring mechanisms, and is

audited by Independent Auditors.

Appropriate actions are taken by management to correct

deficiencies as they are identified. The Company has a process

in place to continuously monitor the processes and identify

gaps, if any, and implement new and/or improved controls

wherever the effect of such gaps would have a material effect


on the Company’s operations. The Company performed an

evaluation and made an assessment of the adequacy and

effectiveness of the Company’s internal financial controls as at

March 31, 2019. Based on this assessment, the management

believes that, as of March 31, 2019, the Company’s internal

controls over financial reporting was effective and our

Statutory Auditors have expressed an unmodified opinion on

the adequacy and operating effectiveness of the Company’s

internal financial controls over financial reporting in page no. 53

of this annual report.

The internal control environment includes an enterprise-

wide attitude of integrity and control consciousness that

establishes a positive ‘tone at the top’. This is exemplified by

our ethics program that includes long-standing principles and

policies on ethical business conduct that require employees

to maintain the highest ethical and legal standards in the

conduct of International Paper business, which have been

distributed to all employees; a toll-free telephone helpline

whereby any employee may anonymously report suspected

violations of law or company’s policy; and an office of ethics

and business practice.

The internal control system further includes careful

selection and training of supervisory and management

personnel, appropriate delegation of authority and division

of responsibility, dissemination of accounting and business

policies throughout the company, and an extensive program

of internal audits with management follow-up.

The Board of Directors, assisted by the Audit Committee,

monitors the integrity of the Company’s financial statements

and financial reporting procedures, the performance of the

Company’s internal audit function and independent auditors,

and other matters set forth in Audit Committee charter.

The Committee, which consists of independent directors,

meets regularly with representatives of management, and

with the independent auditors and the Internal Auditor, with

and without management representatives in attendance, to

review their activities.

The Committee has reviewed and discussed the financial

statements for the year ended March 31, 2019, including

critical accounting policies and significant management

judgments, with management and the independent

auditors.

INFORMATION TECHNOLOGY (IT)

The Company continued its focus on enabling business

processes and systems through strategic adoption of IT. These

covered all the operating areas including manufacturing, sales

and marketing, human resources and forestry. Select staff

were trained on new data analytics and data automation tools

to enhance productivity, reduce manual work and increase

accuracy. The focus areas include Finance, Sales, Marketing,

Forestry and Manufacturing. New process automation in

our Farm forestry operation has enhanced our capability to

track saplings from production to delivery. Further process

automation within our environmental management operation

has reduced manual work and improved our data management

and our ability to ensure that we operate in compliance to the

Regulations. We have provided new analysis and report tools

for our commercial team to better understand key market

and customer trends, thus leading to better decisions. The

Company is also focusing on innovation within IT to further

reduce the costs and introduce new tools.

OUR PEOPLE

We strongly believe people are the foundation of our

Company, so investing to develop capabilities is important

to achieve our goals. The IP Leadership Model of 3 C’s –

Character, Capability and Catalyst – have become a natural

part of our leadership language and are well integrated

into our people development tools and systems. We have

robust talent management processes that include individual

performance & development plans, organization assessments

and succession planning for leadership positions. We use

a balance of approaches to develop our teams including

engagement plans, training & skill development, career

planning and health & wellness programs to build a strong

organization and strong individuals.

With safety as a top priority, we make extensive investments

in training and skill development to raise awareness of risks

and certify knowledge for procedures and conditions. Our

Manufacturing Excellence (ME) program trains and certifies

expertise in techniques using 6-sigma, Lean, RCFA and

process improvement. We have ~94 certified green and

black belts who take on improvement projects to make our

operations better, while another ~50 trained yellow belts

inculcate lean culture into everyday practices. To encourage

health and well-being of our workforce, we provided free

annual health check-up facility for all employees during

the year. Leveraging IP’s Global Leadership Institute’s

resources and training methodology, we provided

leadership and management development trainings during

the year. This included behavioural programs aimed at

skill enhancement, and leadership programs specifically

designed for front-line leaders, so they learn how to engage

and lead our employees to perform to their fullest potential.

We invited our top 70 leaders to an annual leadership

conference to challenge their thinking, broaden their

knowledge on key industry and technology updates and

seek alignment on our goals and expectations. We utilize

International Paper’s global training platform to develop

leaders with their international colleagues across various

disciplines including strategy, commercial excellence and

best practice sharing.

We advocate diversity and inclusion including diversity of

experience, background, gender and race. People with

diversity of background and experience bring new ideas,

challenge the old norms and better prepare us to compete

and serve our diverse customers and markets.

IP APPM has ~1,900 employees and ~3,200 contract

workers.

IP APPM OUTLOOK

IP APPM has created a platform for sustainable growth while

working with the core priorities. Despite the competitive

challenges in the external environment, the team at IP APPM

is committed to making sure that the present momentum is

maintained in the future as well.

In order to create a vibrant organization that works for

sustainable growth, considerable up-gradation has been done

to the systems and processes to enhance safety, productivity,

performance and accountability; significant investment has


been made in people development, operational excellence,

customer contact and sustainable solutions; increased

employee engagement; considerable work done to become a

low cost producer; improved manufacturing reliability levels;

and overall created a winning organization. All of these are

being put together to make IP APPM an increasingly better

and a more competitive Company.

Our Company’s priority is to delight our customers with high

quality products and best in-industry service. To do this, we will

ensure the highest standards of people, safety, ethics, talent

development, sustainability of forests, increased volume and

revenue, higher productivity, become cost competitive and

enhance profitability.

RISK & RISK MITIGATION

Risks and uncertainties are an inherent part of every business,

and yet it is important to identify the risks and take proactive

steps to mitigate and minimize them. IP APPM identifies and

evaluates risks as early as possible and limits business losses

by taking suitable measures. The Company aims to avoid

risks that pose a threat to its sustainable growth.

IP APPM understands that risks can negatively impact fruition

of both short-term operational and long-term strategic goals.

Risk management is a part of the Company’s business

planning and controlling process.

The Company operates a framework created in line with

its parent organization, customizing to fit into the local

requirement, through which financial risks have been

identified based on their severity. These risks are identified

on a continuous basis through business process studies,

internal audits, financials reviews etc. IP APPM understands

certain inherent financial risks which are imperative due to

the environment in which it operates.

Depending on the dynamics and severity, risks are

documented and prioritized for assessment of their impact.

Various financial risks such as credit risks, treasury risks,

finance transactional risks, reporting risks are measured

vis-à-vis regulatory risks. Compliance risks are embedded

into IP APPM’s overall enterprise risk framework depending

on their severity and are reviewed for their impact on the

business objectives of the Company.

IP APPM proactively manages finance risks to maintain

prudent operations. These risks are classified as short to

medium to long depending upon their impact and remedial

options. They are reported and reviewed at appropriate

managerial level. Depending upon severity of such risks,

they are further reported to the Audit Committee and

Board of Directors as applicable. IP APPM effectively uses

management reporting tools to report material financial risks

at appropriate levels. The following factors are considered for

determining the materiality:

• Someeventsmaynotbematerial individuallybutmaybe found material collectively;

• Some events may have material impact qualitativelyinstead of quantitatively;

• Someeventsmaynotbematerial atpresentbutmayhave material impact in future.

The industry specific risks are broadly discussed below:

Risk Risk Definition Risk Impact

(Low, Medium, High) Risk Mitigation

Safety Occupational illness and accidents

may result in fatal injury including loss

of life of our employees, workmen

or contractors, apart from direct and

indirect loss of production and property

Medium/High Continuous efforts are being made to comply

IP global EHSS standard with Safety Leading

indicator and appropriate training with

assessment.

Raw Materials The paper industry requires a

sustainable supply of wood to survive

and flourish. Wood accounts for

approximately 40% of the cost of

production. Any threat in supplies would

adversely affect the survival of the

paper industry.

High The Company has implemented a Farm Forestry

program through partnership with farmers,

Research institutions and vendors. The company

pro-actively build special bond with farmers in our

vicinity of 150 km through large scale plantation

and ensuring remunerative prices for the harvest.

To develop sustained fiber supply within

catchment of 150 km radius, company also

partnered with private nursery growers for

capacity building for production and distribution

of clones. Company also continued to partner

with Institute of Forest Genetic & Tree Breeding,

Coimbatore (IFGTB) to ensure the broadest

approach to sharing best practices, gaining

knowledge and performing R&D for enhancing

productivity.

General

Economic

Factors

Adverse business developments could

have a negative effect on the demand

for paper products, financial conditions

and results of operation. The paper

industry has a positive correlation to

economic development and lower GDP

growth could affect business fortunes.

High /Medium - Strong management and leadership capabilities

in forecasting

- Strong focus on market penetration, sales

training and product innovations


Cyclicality of

Industry

Cyclical demand for paper could have

an adverse impact on sales. The

reduction in sale prices will affect

IP APPM’s operations. The cyclicality of

the business could depress margins or

growth.

Medium IP APPM has continuously rationalized and strived

to improve efficiencies to lower its costs, added

to its scale of operations and stepped up its

volume of value-enhancing products. Efforts are

being made to scale up the operating leverage

as well as by lowering the fixed costs per ton of

paper to protect margins.

Heightened

Competition in

the Industry,

and threat from

imports

There is increased competition

from manufacturers and addition to

capacities by many of them will add

to pressures in the market. It’s a

highly competitive field with several

peers seeking to improve their market

presence.

Pressure of imports expected to grow

moderately, inspite of lower sales price

realisations in India compared to other

export destinations.

High IP APPM has grown into one of the most

competitive producers of pulp and paper, and with

its product development, investment in quality

and branding, the Company retains a significant

competitive edge in the market. IP APPM has

been recognized for the branding and quality of its

grades and the newly introduced varieties have

been received well by the market. Leadership

positions in terms of product quality have been

earned over the decades in some of the key

segments such as cut-size and high-grade writing

and printing papers and the Company is rated

amongst the top three in terms of quality in

almost all its product segments.

Product

Substitution

Electronic medium has reduced the

archiving needs that were met by lower

grades of paper which could impact

demand pull within the cream wove

category.

Low Growth in demand and consumption of both

lower and high-grade writing and printing papers

has outpaced the threats with higher usage in the

copier and stationery segments.

IP APPM sees no threat in the short and medium

term within its product categories since all of

them are growing, especially given the low base

in paper usage and consumption.

Technology Failure to keep pace with production

technology can lower the competitive

edge indigenously and globally.

High/medium Efforts are ongoing to enhance its processes

and optimize on resources to meet the needs

of the market. The Company is committed to

consistently reduce its cost of production by

adopting the latest in technology while improving

the quality of its end-product.

Utilities The paper industry needs large

quantities of power, fuel and water

to operate. Lack of availability of any

of these utilities can add to the cost

sensitivities of the industry.

Medium/High IP APPM has minimized its risk by investing

in a recovery boiler, a coal-fired boiler and a

34 MW turbine that supplements the power

drawdown from the grid. Availability and quality

of coal supplies have improved. The Company

salvages the residual lignin in wood in its pulping

process to fire in the recovery boiler and hence

uses every part of the wood. IP APPM has

considerably reduced its need for fossil fuels

and made adequate plans to protect its needs.

There is adequate availability of coal for IP APPM

as the Company has ties with producers such

as Singareni Collieries and Mahanadi Coalfields

Limited for uninterrupted supplies.

Unit:Rajahmundry is adjacent to the River

Godavari which has copious availability of water.

Yet, the mill has invested in suitable processes to

recycle water and strives to conserve the use of

precious natural resource. As far as possible, the

Company recycles water and, more important,

minimizes wastages. Over the years, IP APPM

has been consistently reducing energy and water

costs per MT of product manufactured.

Exchange Rate Currency exchange rates could undergo

changes with the Indian rupee turning

volatile for part of the year. This could

have a potential impact on the export

earnings of the Company.

Low IP APPM is conscious and watchful of the

rupee’s movements. Hedging is done wherever

necessary and forward covers are taken to protect

the Company’s interests. The Company is also

conservative in booking the unfavourable impact

of exchange fluctuations as soon as the impact

is determined. Prudential accounting norms are

followed in line with the Accounting Standards.


Environment The pulp and paper industry has a

commitment to the environmental

protection, and it would be essential

to remain sensitive to the needs of the

planet

High As a responsible corporate citizen, IP APPM has

hugely minimized the impact of mill operations by

taking a proactive role. The Company encourages

planting twice the number of trees than it

harvests and reduces water consumption year

after year.

The latest technology has been adopted for

elemental chlorine-free bleaching of pulp and

recycling of water. Efficiency of the effluent

treatment plant has been improved with diffused

aeration system and by installing a cooling

tower. IP APPM installed a Non-Condensable

Gases (NCG) system, both for the collection and

incineration of high volume low concentration and

low volume high concentration gases. This has

made the mill and surrounding environment odor

free. IP APPM also installed high efficiency ESPs

to contain suspended particulate matter to less

than 50 ppm.

Several such initiatives have been taken to ensure

IP APPM meets high standards much before the

standards are laid down or implemented by all

regulatory authorities.

Human

Resources

Failure to attract, retain or develop

talent in a competitive market or in

managing cordial industrial relations

may impact our long term growth.

Failure to keep focus on safety,

compliance, and Engagement which

can lead to poor performance. Talent

retention is another risk associated with

human resources as other competitor

may opt to recruit our capable

employees.

Medium IP APPM constantly maintains a strong focus on

improving employee engagement and employee

experience – through robust safety culture,

multiple training and skill enhancement avenues,

regular employee engagement and fostering a

culture of empowerment and inclusion.

IP APPM has minimized this risk by focusing on

training and engagement programme.

We have been conducting training in various

areas like Manufacturing Excellence, Leadership

trainings, Mill technical trainings (Mechanical

Precision Measurement, Instrumentation &

Electrical Precision Measurement) . These

helped us to improve capability of people to work

efficiently and to improve engagement.


REPORT ON CORPORATE GOVERNANCE

1. Company’s philosophy on Code of Governance

The Company’s philosophy on Corporate Governance is aimed at assisting the management of the Company in the

efficient conduct of the business and to meet its obligations to the stakeholders. The Company firmly believes that practice

of Corporate Governance, inter alia, should aim at meeting the aspirations of the stakeholders and the expectations of

the society at large. Accordingly, the Company believes in and has consistently practiced good Corporate Governance.

In pursuance of this philosophy, the management adheres to transparency, professionalism and accountability in

performance of its role.

2. Board of Directors

a. Composition of Board

As on March 31, 2019, the Company had 9 Directors with one Chairman & Managing Director. Of the other 8

Directors, 5 were Independent Non-Executive Directors, 3 were Non-Independent Non-Executive Directors.

b. Attendance of each Director at the meeting of the Board of Directors held during the financial year, last Annual General Meeting (AGM) and the number of other Board of Directors or Committees in which a director is a member or chairperson:

NameCategory of Directorship

Attendance Particulars No. of

other director-

ships1

Committee2

No. of Board

Meetings

Last AGM

Member- ships

Chairperson-ships

Mr. Donald P. Devlin

(Chairman & Managing Director)

Executive

Director

4 Yes - - -

Mr. W. Michael Amick Jr. Non-

Independent

Non-Executive

Director

4 Yes - - -

Mr. Russell V. Harris 2 Yes - - -

Ms Megan A. F. Bula 4 Yes - - -

Mr. M. S. Ramachandran Independent

Non-Executive

Director

4 Yes 5 1 1

Ms Ranjana Kumar3 3 No 4 1 -

Mr. Adhiraj Sarin 4 Yes 1 - -

Mr. Milind Sarwate 4 Yes 7 3 5

Mr. Praveen P. Kadle 4 Yes 2 1 -

1 Excluding foreign companies, private limited companies and Companies under Section 8 of the Companies Act,

2013.2 Membership/Chairpersonship of only the Audit Committee and Stakeholders Relationship Committee have

been considered.3 Ceased to be a Director from the close of business hours of 31.03.2019 as she was not interested to continue

as Director after expiry of present term.

Details of Other Directorships held in listed companies and the category of directorship:

Sl. No. Name of Director Name of listed company Category of Directorship

1 Mr. Donal P. Devlin - -

2 Mr. W. Michael Amick Jr. - -

3 Mr. Russell V. Harris - -

4 Ms Megan A. F. Bula - -

5 Mr. M. S. Ramachandran Supreme Petrochem Limited Non-Executive Independent

DirectorG O C L Corporation Limited

Ester Industries Limited

Gulf Oil Lubricants India Limited

ICICI Prudential Life Insurance Company Ltd Non-Executive Independent

Director Chairman


Sl. No. Name of Director Name of listed company Category of Directorship

6 Ms Ranjana Kumar Tata Global Beverages Limited Non-Executive

Independent DirectorBritania Industries Limited

Rane Brake Lining Limited

7 Mr. Adhiraj Sarin Tinna Trade Limited Non-Executive Independent

Director

8 Mr. Milind Sarwate Glenmark Pharmaceuticals Limited Non-Executive Independent

DirectorMindtree Limited

Matrimony.com Limited

9 Mr. Praveen P. Kadle - -

c. No. of meetings of the Board of Directors held and dates on which held

During the financial year, four meetings of Board of Directors were held on May 2, 2018; August 2, 2018; October

24, 2018 and January 30, 2019.

d. The Directors are unrelated to each other except as members of the Board.

e. None of the Non-Executive Directors and Independent Directors hold equity shares and convertible instruments of

the Company.

f. The details of Familiarization Programme are placed on the Company’s website viz., www.ipappm.com.

g. A chart or a Matrix for skills/attributes identified by the Board of Directors as required in the context of business/

sectors to function effectively is given in Appendix - 1

h. In the opinion of the Board, the independent directors fulfil the conditions specified in SEBI (Listing Obligations and

Disclosure Requirements) Regulations, 2015 and are independent of the management.

3. Audit Committee

Brief description of terms of reference of Audit Committee as per the Charter approved by the Board:

a. Terms of reference

i. Oversight of the Company’s financial reporting process and disclosure of its financial information to ensure

accuracy and correctness;

ii. Recommendation for appointment, remuneration and terms of appointment of auditors of the Company;

iii. Approval of payment to statutory auditors for any other services rendered by the statutory auditors;

iv. Reviewing with the management of the annual financial statements before submission to the Board, with

particular reference to the following:

• MattersrequiredtobeincludedintheDirectors’ResponsibilityStatementtobeincludedintheBoard’sreport in terms of clause (c) of sub-section 3 of section 134 of the Companies Act, 2013;

• Changes,ifany,inaccountingpoliciesandpracticesandreasonsforthesame;

• Majoraccountingentriesinvolvingestimatesbasedontheexerciseofjudgmentbymanagement;

• Significantadjustmentsmadeinthefinancialstatementsarisingoutofauditfindings;

• Compliancewithlistingandotherlegalrequirementsrelatingtofinancialstatements;

• Disclosureofanyrelatedpartytransactions;

• Modifiedopinion(s)inthedraftauditreport;

v. Reviewing with the management the quarterly financial statements before submission to the Board for approval.

vi. Review the functioning of the whistle blower mechanism;

vii. Evaluation of internal financial controls and risk management systems.

b. Composition of Audit Committee

As at April 1, 2018, the Audit Committee comprised of five Members viz. Mr. Praveen P. Kadle as Chairman,

Mr. Milind Sarwate, Mr. Adhiraj Sarin, Mr. W. Michael Amick Jr. and Mr. Donald P. Devlin as Members.



The Board at its meeting held on January 30, 2019 reconstituted the Audit Committee and the Composition of Audit

Committee as on March 31, 2019 is as follows:

Name Category Designation

Mr. Praveen P. Kadle Independent Non-Executive Director Chairperson

Mr. Milind Sarwate Independent Non-Executive Director Member

Mr. Adhiraj Sarin Independent Non-Executive Director Member

Mr. W. Michael Amick Jr. Non-Independent Non-Executive Director Member

All Members of Audit Committee are financially literate and Mr. Milind Sarwate and Mr. Praveen P. Kadle have

accounting and related financial management expertise.

c. Meetings and attendance during the year

During the financial year, four meetings of Audit Committee were held on May 2, 2018; August 1, 2018; October 24,

2018 and January 30, 2019 and all the Members attended these meetings.

Mr. C. Prabhakar, Sr. Vice President (Corporate Affairs) & Company Secretary acts as the Secretary to

the Committee.

4. Nomination and Remuneration Committee

Brief description of terms of reference of Nomination and Remuneration Committee as per the Charter approved by the

Board:

a. Terms of reference

• Formulatingcriteriafordeterminingthequalifications,positiveattributesandindependenceofadirector;

• Identifying the persons who are qualified to become Executive Directors, Non-Executive Directors andIndependent Directors and to recommend to the Board their appointment and removal;

• IdentifyingpersonswhomaybeappointedinSeniorManagementandtorecommendtoBoardtheirappointmentand removal;

• DeviseapolicyonBoarddiversity;

• SuccessionPlanning;

• Recommendtotheboard,allremuneration,inwhateverform,payabletoseniormanagement.

Composition of Nomination and Remuneration Committee

There is no change in the composition of the Committee membership during the year and the composition of the

Committee as on March 31, 2019 is as follows:


Mr. Adhiraj Sarin Independent Non- Executive Director Chairperson

Mr. M.S. Ramachandran Independent Non- Executive Director Member

Mr. W. Michael Amick Jr.Non-Independent Non-Executive

DirectorMember

Mr. Donald P. Devlin Executive Director Member

b. Meetings and attendance during the year

During the financial year, two meetings of Nomination and Remuneration Committee were held on October 25, 2018

and January 30, 2019. All the Members attended both the meetings.

c. Performance evaluation criteria for independent directors

The Board of Directors evaluates the performance of independent Directors on yearly basis in terms of provisions of

Code of Independent Directors.


5. Remuneration of Directors

a. All pecuniary relationship or transactions of the Non-Executive Directors

The details of sitting fees and commission (relating to financial year 2017-18) paid to the Independent Directors

during the financial year ended March 31, 2019 were as follows:

(` in lakhs)

Name Sitting Fees Commission* Total

Mr. M.S. Ramachandran 7.00 11.88 18.88

Ms Ranjana Kumar 5.25 11.88 17.13

Mr. Adhiraj Sarin 8.50 11.88 20.38

Mr. Milind Sarwate 7.00 11.89 18.89

Mr. Praveen P. Kadle 7.00 11.89 18.89

TOTAL 34.75 59.42 94.17

* Excluding applicable taxes

b. Criteria of making payments to Non-Executive Directors

The Board of Directors at its meeting held on July 22, 2014 approved to pay Non-Executive Directors a sitting fees

of ` 1,00,000 per meeting for attending the Board Meeting and ` 75,000 per meeting for attending the Meetings of

Committees of Board with effect from July 1, 2014.

The Shareholders at the 51st Annual General Meeting held on August 27, 2015 approved to pay, for a period of five

years, commission to Independent Directors at a rate not exceeding one percent of net profits of the Company

calculated as per Section 198 of the Companies Act, 2013, as may be decided by the Board from time to time.

c. Disclosure with respect to remuneration

Independent Directors were paid only sitting fees and commission on profits (relating to financial year 2017-18)

during the financial year 2018-19.

The contract with Executive Director is terminable by giving six months notice on either side.

The Company did not issue any stock options during the year.

6. Stakeholders Relationship Committee

As at April 1, 2018 Stakeholders Relationship Committee comprised of two members viz. Ms Ranjana Kumar as

Chairperson and Mr. Donald P. Devlin as Member.

During the year, the Board at its meeting held on January 30, 2019 reconstituted the Committee by appointing Ms Megan

A.F. Bula as Member on Stakeholders Relationship Committee with effect from January 30, 2019 in compliance with

SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018.

The composition of Stakeholders Relationship Committee as on March 31, 2019 is as follows:


Ms Ranjana Kumar Independent Non- Executive Director Chairperson

Mr. Donald P. Devlin Executive Director Member

Ms Megan A.F. Bula Non-Independent Non-Executive Director Member

Consequent to cessation of Ms Ranjana Kumar as Director with effect from March 31, 2019, she concurrently ceased

to be a Member of Stakeholders Relationship Committee. The vacancy was filled up by appointing Mr. Praveen P. Kadle,

Independent Director as Chairperson.

During the financial year, the Stakeholders Relationship Committee met on January 31, 2019. All the three Members

attended the meeting.

The Board designated Mr. C. Prabhakar, Sr. Vice President (Corporate Affairs) & Company Secretary as Compliance

Officer of the Committee.

The details of the status of complaints received from the shareholders during the financial year ended March 31, 2019 are

furnished below:

No. of shareholders’ complaints received during the financial year 4

No. of complaints solved to the satisfaction of shareholder 4

No. of complaints not solved to the satisfaction of shareholder -

No. of pending complaints as on March 31, 2019 -


7. General Body Meetings

a. The location and time of the last three Annual General Meetings held

Year ended Date and time Venue

March, 2016 July 27, 2016 at 12.00 NoonCherukuri Subbarao Gannemma Udyana Kalyanavedika,

Jawaharlal Nehru Road, Rajahmundry –533 103

March, 2017 July 25, 2017 at 12.00 NoonCherukuri Subbarao Gannemma Udyana Kalyanavedika,

Jawaharlal Nehru Road, Rajahmundry –533 103

March, 2018 August 2, 2018 at 12.30 P.M.Cherukuri Veerraju Subbalakshmi Convention Center, Jawaharlal

Nehru Road, Rajahmundry -533 103

b. Special Resolutions passed in the previous three Annual General Meetings

Date Description of Special Resolutions passed

July 27, 2016 NIL

July 25, 2017

1. Reappointment of Mr. Rampraveen Swaminathan as Chairman & Managing Director for

the period from March 1, 2017 to April 27, 2017.

2. Appointment of Mr. Donald P. Devlin as a Director with effect from February 22, 2017 and

Chairman & Managing Director with effect from April 28, 2017

August 2, 2018 NIL

c. No special resolution was passed through postal ballot during the financial year ended March 31, 2019. However,

all Resolutions were passed through E-voting and poll at the 54th Annual General Meeting of the Company held on

August 2, 2018.

d. At present no special resolution is proposed to be conducted through postal ballot. The procedure laid down in

Companies (Management and Administration) Rules, 2014 would be followed as and when necessary.

8. Means of Communications

Quarterly, half-yearly and annual financial results are usually published in Business Line (English Version) and vernacular

regional newspaper viz. Andhra Prabha. The results are placed on the Company’s website: www.ipappm.com.

Official news releases are being displayed on the website of the Company. Presentations are proposed to be made to

media, analysts, institutional investors etc.

9. General Shareholder Information

a. Date, Time and Venue of Annual General Meeting

55th Annual General

Meeting

Date & time Venue

August 1, 2019 at 12.30 P.M.

Cherukuri Veerraju Subbalakshmi Convention Centre,

Jawaharlal Nehru Road, Rajahmundry – 533 103,

East Godavari District, Andhra Pradesh, India

b. Financial calendar – (Tentative and subject to change)

Financial year: April 1, 2019 to March 31, 2020

Particulars Period ended On or before

Unaudited Financial Results for the quarter ending



Audited Financial Results for the year ending

Annual General Meeting for the year ending

June 30, 2019

September 30, 2019

December 31, 2019

March 31, 2020

March 31, 2020

August 14, 2019

November 14, 2019

February 14, 2020

May 30, 2020

September 30, 2020

c. Listing on stock exchanges

BSE Limited (BSE)

Phiroze Jeejeebhoy Towers,

Dalal Street,

Mumbai – 400 001

National Stock Exchange of India Limited (NSE)

“Exchange Plaza”

Bandra-Kurla Complex

Bandra (East), Mumbai – 400 051

The Company paid the Annual Listing fees for the financial year 2019-20 to BSE and NSE.



d. Stock Code

BSE 502330

NSE Symbol : IPAPPM Series : EQ

ISIN (for Dematerialization) INE435A01028

e & f. The details of monthly high and low quotations of the equity shares of the Company traded on the stock exchanges are given below:

a. BSE

MonthShare Price ` BSE Sensex

High Low High Low

2018

April 334.00 294.15 35,213.30 32,972.56

May 360.70 310.00 35,993.53 34,302.89

June 335.00 302.20 35,877.41 34,784.68

July 354.20 304.10 37,644.59 35,106.57

August 502.70 349.60 38,989.65 37,128.99

September 591.15 434.00 38,934.35 35,985.63

October 506.90 395.05 36,616.64 33,291.58

November 555.00 445.75 36,389.22 34,303.38

December 497.50 418.40 36,554.99 34,426.29

2019

January 486.50 399.60 36,701.03 35,375.51

February 482.00 426.15 37,172.18 35,287.16

March 503.55 435.40 38,748.54 35,926.94

b. NSE

MonthShare Price ` NIFTY 50

High Low High Low

2018

April 334.80 293.00 10,759.00 10,111.30

May 360.00 310.00 10,929.20 10,417.80

June 337.10 302.40 10,893.25 10,550.90

July 353.20 302.75 11,366.00 10,604.65

August 502.50 349.20 11,760.20 11,234.95

September 591.00 433.45 11,751.80 10,850.30

October 508.55 396.00 11,035.65 10,004.55

November 554.60 444.15 10,922.45 10,341.90

December 484.85 414.55 10,985.15 10,333.85

2019

January 487.00 399.20 10,987.45 10,583.65

February 482.40 412.80 11,118.10 10,585.65

March 504.70 435.05 11,630.35 10,817.00

g. The securities of the Company have not been suspended from trading during the financial year ended March 31,

2019.


h. Registrar and Share Transfer Agent

Karvy Fintech Private Limited

(Formerly known as Karvy Computershare Private Limited)

Corporate Registry

Karvy Selenium, Tower- B, Plot No 31 & 32, Gachibowli,

Financial District, Nanakramguda, Serilingampally Mandal

Hyderabad – 500 032

Toll Free No. (India) 1800 3454 001

Phone : +91 40 6716 1606/1770 Fax : +91 40 2342 0814

Email : [email protected]

Contact Person: Mr. Praveen Chaturvedi – General Manager

i. Share Transfer System

The share transfers/transmission/deletion of name etc., in physical mode are being approved by the authorized

person as per the delegation of powers by the Board in every 10 days. The average time taken for registering the

share transfers is approximately 10 days from the date of receipt of valid request.

j. Distribution of Equity Shareholding as on March 31, 2019

Nominal Value of Equity shares `

Shareholders Value

Number % ` %

1 - 5000 15,393 88.11 1,61,64,840 4.07

5001 - 10000 1,007 5.76 78,08,370 1.96

10001 - 20000 519 2.97 75,67,880 1.90

20001 - 30000 175 1.00 44,59,660 1.12

30001 - 40000 88 0.50 31,09,130 0.78

40001 - 50000 69 0.40 32,53,840 0.82

50001 - 100000 125 0.72 91,08,980 2.29

100001 and above 94 0.54 34,62,27,690 87.06

TOTAL 17,470 100.00 39,77,00,390 100.00

Category of equity shareholders as on March 31, 2019

CategoryNo. of shares

held%

A. Foreign Promoter 2,98,27,529 75.00

B. Public shareholdings

1. Institutional Investors

a. Mutual funds, Foreign Portfolio Investors, Financial

Institutions/ Banks, insurance companies 18,29,466 4.60

b. Foreign Banks 150 0.00

Sub-total 18,29,616 4.60

2. Non-Institutions

a. Indian public 62,05,381 15.60

b. NBFC registered with RBI 15,200 0.04

c. Bodies corporate 14,69,619 3.70

d. Non-Resident Indians 2,54,067 0.64

e. Clearing members 41,542 0.10

f. Trusts 17,981 0.05

g. IEPF 1,09,078 0.27

h. Unclaimed Suspense Account 26 0.00

Sub-total 81,12,894 20.40

Total public shareholding (1+2) 99,42,510 25.00

Total (A+B) 3,97,70,039 100.00

k. Dematerialization of shares as on March 31, 2019

Depository nameNo. of shares

dematerializedPercentage on equity

share capital

National Securities Depository Limited 3,73,12,973 93.82

Central Depository Services (India) Limited 22,56,504 5.68

Total dematerialized shares 3,95,69,477 99.50

mailto:[email protected]


l. No GDRs, ADRs/warrants/convertible instruments have been issued by the Company during the year.

m. Commodity price risk or foreign exchange risk and hedging activities: Furnished under the head

‘Management of Risks’ in page no. 37.

n. Plant Locations

Unit: Rajahmundry Unit: Kadiyam

Rajahmundry - 533 105

East Godavari District


Industrial Area,

Near Kadiyam Railway Station,

M.R.Palem - 533 126, Kadiyam Mandal,

East Godavari District, Andhra Pradesh, India

o. Address for Correspondence from shareholders

Karvy Fintech Private Limited

Karvy Selenium, Tower - B,

Plot No 31 & 32, Gachibowli,

Financial District, Nanakramguda, Serilingampally District,

Hyderabad – 500 032, Telangana, India

Secretarial Department

International Paper APPM Limited

Rajahmundry – 533 105



p. E-mail IDs for investor grievance redressal:

1. [email protected]

2. [email protected]

q. As there are no debt instruments and no fixed deposits are invited, the Company has not obtained any rating during

the year.

r. No debt instruments or for any fixed deposit programme or any scheme or proposal involving mobilization of funds,

whether in India or abroad were issued by the Company.

10. Other Disclosures

a. Disclosure on materially significant related party transactions

During the financial year, there were no materially significant related party transactions that have potential conflict

with the interests of the Company at large. The Policy on Related Party Transactions is posted on the Company’s

website viz., www.ipappm.com.

b. Details of penalties imposed on the Company

The Company received notices from BSE Limited and National Stock Exchange of India Limited in November,

2018 levying fine for non-compliance of Regulation 18 of SEBI (Listing Obligations and Disclosure Requirements)

Regulations, 2015 (LODR Regulations) in respect of composition of Audit Committee in the Corporate Governance

Report submitted for the quarter ended September 30, 2018.

The Company replied to the above stock exchanges that the Company constituted the Audit Committee as per LODR

Regulations and hence fully complied with Regulation 18 of SEBI (Listing Obligations and Disclosure Requirements)

Regulations, 2015 as this Regulation does not specify that any fraction of a number while computing the composition

need to be rounded off to as one.

The Company filed a writ petition No. 44910 of 2018 before Hon’ble High Court of Judicature at Hyderabad for the

States of Telangana and Andhra Pradesh (Court) and the Hon. Court passed an Order dated December 11, 2018 in

IA No. 1 of 2018 in W.P. No. 44910 of 2018 directing the Stock Exchanges not to take any coercive steps against the

Company.

However, as a measure of good Corporate Governance, the Audit Committee of the Company has also been

voluntarily reconstituted with effect from January 30, 2019 comprising of three Independent Non-Executive Directors

and one Non-Independent Non-Executive Director.

Except the above, there were no other non-compliance, penalties, strictures imposed on the Company by the Stock

Exchanges or SEBI or any statutory authority, on any matter related to capital markets during the last three years.

c. Whistle Blower Policy

The Company has formulated Whistle Blower Policy and established a mechanism for directors and employees to

report to the management concerns about unethical behavior, actual or suspected fraud or violation of the Company’s

Code of Conduct and Ethics Policy. This mechanism provides for adequate safeguards against victimization of

director(s)/employee(s) who avail of the mechanism and also provide for direct access to the Chairman of the

Audit Committee in exceptional cases. The Whistle Blower Policy is posted on the Company’s website viz.,

www.ipappm.com.






d. Details of compliance with mandatory requirements and adoption of non-mandatory requirements

The Company has complied with all mandatory requirements specified in Regulation 17 to 27 and clauses of (b) to

(i) of Regulation 46 (2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Non-Mandatory requirements

1. Shareholder Right: This will be considered for adoption in future.

2. Audit Qualifications: The Company is already in the regime of unqualified financial statements. Auditors have

raised no qualification on the financial statements of the current financial year.

3. Reporting of Internal Auditor: External consultancy firm was appointed as Internal Auditor of the Company

which has direct access to the Audit Committee.

e. There were no material subsidiaries during the year

f. The Policy on Related Party Transactions is placed on the Company’s website.

g. No funds were raised through preferential allotment or qualified institutions placements during the year.

h. A Certificate dated April 30, 2019 from M/s. D. Hanumanta Raju & Co., Company Secretaries, a company secretary in

practice confirming that none of the directors of company have been debarred or disqualified from being appointed

or continuing as directors of companies by the Board/Ministry of Corporate Affairs or any such statutory authority

has been received.

i. None of recommendations of any Committee of the Board which are mandatorily required was rejected by the Board

during the year.

j. An amount of ` 74.70 lakhs was paid to M/s. Deloitte Haskins & Sells, Statutory Auditors for rendering their services

during the year.

k. During the year, one complaint was filed under the Sexual Harassment of Women at Workplace (Prevention, Prohibition

and Redressal) Act, 2013 and the respondent against whom the complaint had been filed has subsequently resigned

from the services of the Company.

11. There were no non-compliance of requirements of Corporate Governance during the year.

12. Code of Conduct for Directors and members of senior management

The Company adopted a Code of Business Conduct and Ethics for its Directors and members of senior management. The

Code has also been posted on the Company’s website: www.ipappm.com. The Chairman & Managing Director has given a

declaration that all the Directors and members of senior management have affirmed compliance with the Code of Conduct.

13. CEO/CFO Certification

A certificate duly signed by Chairman & Managing Director and CFO relating to financial statements and internal controls

and internal control systems for financial reporting as per the format provided in Regulation 17(8) of the SEBI (Listing

Obligations and Disclosures Requirements) Regulations, 2015 was placed before the Board and was taken on record.

14. Equity shares in the Unclaimed Shares Demat Suspense Account

In terms of Regulation 39 (4) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company

opened a demat account and dematerialized the unclaimed shares. The Company is maintaining the details of shareholding

of each individual allottee whose shares are credited to the Unclaimed Shares Demat Suspense Account.

The particulars of shares in ‘’International Paper APPM Limited – Unclaimed Shares Demat Suspense Account” as on

March 31, 2019 are as follows:

ParticularsNumber of

shareholdersNo. of equity

shares

Aggregate number of shareholders and the outstanding shares lying in the

Unclaimed Shares Demat Suspense Account at the beginning of the year3 28

Number of shareholders who approached the issuer for transfer of shares

from the Unclaimed Shares Demat Suspense Account during the year1 2

Number of shareholders to whom shares were transferred from the

Unclaimed Shares Demat Suspense Account during the year- -

Aggregate number of shareholders and the outstanding shares lying in the

Unclaimed Shares Demat Suspense Account as on March 31, 20192 26

The voting rights on the shares outstanding in the suspense account shall remain frozen till the rightful owners of such

shares claim the shares.



Appendix - 1Skills and attributes identified by Board of Directors

Sl. No. Skills Experience Attributes

1 Practical wisdom and good judgment Specialized knowledge in

specific area

Highest personal and professional ethical

standards and honesty.

2 Financial literacy – ability to read and

understand a financial statement

Detailed knowledge of

the industry or relevant

industrial experience

Integrity, independence and free from

conflict of interest.

3 Specialized professional skills viz.

operations, finance, human resources,

marketing, legal, corporate governance

etc.

Expertise on global issues An enquiring and independent mind.

4 Director Education - a clear

understanding of the role and duties

of a director and knowledge of code of

conduct and business ethics.

High visibility in the field Commitment to improve business,

its continued well-being and making a

difference.

5 Good interpersonal skills and ability to

communicate clearly.

Leadership and

Management experience

Willingness to represent the best interests

of all stakeholders and objectively appraise

the Board and Management performance.

6 Decision Maker- explore options

and choosing those that have the

significant benefit to the organization

and its performance.

International Experience Critical analysis and Judgment.

7 Risk Management Personal networks and

external contacts

Vision, imagination and foresight.

8 Interpersonal sensitivity – a willingness

to keep an open mind and recognize

other perspectives.

Strategic perspectives, able to identify

opportunities and threats.

9 Ability to mentor other directors Innovator – a willingness to challenge

Management and their assumptions,

stimulate Board discussion with new,

alternative insights and ideas.

10 Agility to move from advisor to

challenger as well as being a strong

supportive voice one needed.

Motivation – drive and energy to set and

achieve clear objectives and make an

impact.

11 Advisory Skills Clear personal commitment.

Full participation and proactive as a Board

Member.

Willingness to deal with tough issues.

Maturity and discipline to know and

maintain fine line between governance and

management oversight.


Declaration by the Chairman & Managing Director

The Members of


In compliance with the Regulation 34 (3) of Securities and Exchange Board of India (Listing Obligations and Disclosure

Requirements) Regulations, 2015, I confirm that, on the basis of confirmations/declarations received, all the Members of the

Board of Directors and senior management personnel of the Company have complied with the Code of Business Conduct and

Ethics framed by the Company for the financial year ended March 31, 2019.

Hyderabad Donald P. DevlinApril 18, 2019 Chairman & Managing Director

CERTIFICATE OF COMPLIANCE FROM AUDITORS AS STIPULATED UNDER SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS)

REGULATIONS, 2015

Certificate

To,

The Members of


(Formerly The Andhra Pradesh Paper Mills Limited)

We have examined the compliance of conditions of Corporate Governance by International Paper APPM Limited

(“the Company”), for the year ended on March 31, 2019, as stipulated in Regulation 15(2) of Securities and Exchange Board

of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limited

to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate

Governance. It is neither an audit nor an expression of opinion on the Financial Statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us by the Directors, officers and

the management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the

above mentioned Listing Regulations.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or

effectiveness with which the Management has conducted the affairs of the Company.

For D.HANUMANTA RAJU & COCOMPANY SECRETARIES

CS D. HANUMANTA RAJUPlace: Hyderabad PARTNERDate: April 30, 2019 FCS: 4044, CP NO: 1709


INDEPENDENT AUDITOR’S REPORTTO THE MEMBERS OF INTERNATIONAL PAPER APPM LIMITED

Report on the Audit of the Financial Statements

Opinion

We have audited the accompanying financial statements of

International Paper APPM Limited (“the Company”), which

comprise the Balance Sheet as at March 31, 2019, and the

Statement of Profit and Loss (including Other Comprehensive

Income), the Cash Flow Statement and the Statement of

Changes in Equity for the year then ended, and a summary

of significant accounting policies and other explanatory

information.

In our opinion and to the best of our information and

according to the explanations given to us, the aforesaid

financial statements give the information required by the

Companies Act, 2013 (“the Act”) in the manner so required

and give a true and fair view in conformity with the Indian

Accounting Standards prescribed under Section 133 of the

Act read with the Companies (Indian Accounting Standards)

Rules, 2015, as amended, (“Ind AS”) and other accounting

principles generally accepted in India, of the state of affairs

of the Company as at March 31, 2019, and its profit, total

comprehensive income, its cash flows and the changes in

equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the financial statements in

accordance with the Standards on Auditing specified under

Section 143(10) of the Act (SAs). Our responsibilities under

those Standards are further described in the Auditor’s

Responsibility for the Audit of the Financial Statements

section of our report. We are independent of the Company

in accordance with the Code of Ethics issued by the Institute

of Chartered Accountants of India (ICAI) together with the

ethical requirements that are relevant to our audit of the

financial statements under the provisions of the Act and the

Rules made thereunder, and we have fulfilled our other ethical

responsibilities in accordance with these requirements and

the ICAI’s Code of Ethics. We believe that the audit evidence

obtained by us is sufficient and appropriate to provide a basis

for our audit opinion on the financial statements.

Emphasis of Matter

We draw attention to Note 53 of the financial statements

regarding the ongoing litigation with respect to the levy of

electricity duty by the State Government on consumption

of electricity by captive generating units and the interim

orders of the Hon’ble Supreme Court of India on hearing the

Special Leave Petition filed by the Company, in respect of

which the Company on grounds of prudence and abundant

caution created a provision amounting to ` 2,357.43 lakhs

during the year ended March 31, 2017, in view of the

inherent uncertainty in predicting the final outcome of the

above litigation. Additionally, an amount of ` 1,571.62 lakhs

has been disclosed as contingent liability. Based on the legal

advice obtained, in the opinion of the Management no further

provision would be required in relation to this disputed matter.

Our report is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional

judgment, were of most significance in our audit of the

financial statements of the current period. These matters

were addressed in the context of our audit of the financial

statements as a whole, and in forming our opinion thereon,

and we do not provide a separate opinion on these matters.

We have determined the matters described below to be the

key audit matters to be communicated in our report.

Sr. No. Key Audit Matter Auditor’s Response

1 Provisions and Contingent Liabilities (including income tax)

Refer Notes 2C(e), 21, 22 & 32A, in

the financial statements for the related

disclosures.

The Company has ongoing litigations

with various regulatory authorities and

third parties. Where an outflow of funds

is believed to be probable and a reliable

estimate of the outcome of the dispute

can be made based on management’s

assessment of specific circumstances of

each dispute and relevant external advice,

management provides for its reliable

estimate of the liability. Such accruals are

by nature complex and can take number of

years to resolve and can involve estimation

uncertainty.

Due to the level of judgement relating to

recognition, valuation and presentation of

provisions and contingent liabilities, this is

considered to be a key audit matter.

We obtained an understanding of management’s process to identify

new obligations and changes in existing obligations for compliance with

Ind AS 12 – Income taxes and Ind AS 37 - Provisions, Contingent Liabilities

and Contingent Assets.

We analysed significant changes in material provisions from prior periods and

obtained a detailed understanding of these changes and assumptions applied.

Our audit procedures related to material provisions recognised and contingent

liabilities disclosed in the financial statements included:

• Assessmentoftherecognitioncriteriafortheliability;• Evaluationofthemethodologyadoptedbymanagementforthe

measurement of the liability;

• Assessmentoftheotherkeymeasurementassumptionsandinputs.• WehaverequestedforconfirmationsfromthelegalcounseloftheCompany

representing the litigation matters of the Company at applicable forums.

• WereviewedtheminutesoftheBoardmeetingsincludingothercommittees.

• Testingofthemathematicalaccuracyofthemeasurementcalculation;• Wehaveinvolvedourinternalexpertswithregardtodirectandindirect

taxes, and they have also considered the legal precedence and other rulings

in evaluating management position on the uncertain tax matters.

• Weassessedtheappropriatenessofthepresentationofthemostsignificantcontingent liabilities in the financial statements.


Information Other than the Financial Statements and Auditor’s Report Thereon

• TheCompany’sBoardofDirectorsisresponsiblefortheother information. The other information comprises the

information included in Management Discussion and

Analysis, Board’s Report including Annexures to Board’s

Report, Business Responsibility Report, Corporate

Governance and Shareholder’s Information, but does not

include the financial statements and our auditor’s report

thereon. The Management Discussion and Analysis,

Board’s Report including Annexures to Board’s Report,

Business Responsibility Report, Corporate Governance

and Shareholder’s Information report is expected to

be made available to us after the date of this auditor’s

report.

• Ouropiniononthefinancialstatementsdoesnotcoverthe other information and we will not express any form

of assurance conclusion thereon.

• Inconnectionwithourauditofthefinancialstatements,our responsibility is to read the other information

identified above when it becomes available and, in

doing so, consider whether the other information is

materially inconsistent with the financial statements or

our knowledge obtained during the course of our audit or

otherwise appears to be materially misstated.

• When we read the Management Discussion andAnalysis, Board’s Report including Annexures to Board’s

Report, Business Responsibility Report, Corporate

Governance and Shareholder’s Information, if we

conclude that there is a material misstatement therein,

we are required to communicate the matter to those

charged with governance as required under SA 720 ‘The

Auditor’s responsibilities Relating to Other Information’.

Management’s Responsibility for the Financial Statements

The Company’s Board of Directors is responsible for the

matters stated in Section 134(5) of the Act with respect to

the preparation of these financial statements that give a true

and fair view of the financial position, financial performance

including other comprehensive income, cash flows and

changes in equity of the Company in accordance with the Ind

AS and other accounting principles generally accepted in India.

This responsibility also includes maintenance of adequate

accounting records in accordance with the provisions of

the Act for safeguarding the assets of the Company and

for preventing and detecting frauds and other irregularities;

selection and application of appropriate accounting policies;

making judgments and estimates that are reasonable and

prudent; and design, implementation and maintenance of

adequate internal financial controls, that were operating

effectively for ensuring the accuracy and completeness

of the accounting records, relevant to the preparation and

presentation of the financial statements that give a true and

fair view and are free from material misstatement, whether

due to fraud or error.

In preparing the financial statements, management is

responsible for assessing the Company’s ability to continue

as a going concern, disclosing, as applicable, matters related

to going concern and using the going concern basis of

accounting unless management either intends to liquidate

the Company or to cease operations, or has no realistic

alternative but to do so.

Those Board of Directors are also responsible for overseeing

the Company’s financial reporting process.

Auditor’s Responsibility for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about

whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error, and to

issue an auditor’s report that includes our opinion. Reasonable

assurance is a high level of assurance, but is not a guarantee

that an audit conducted in accordance with SAs will always

detect a material misstatement when it exists. Misstatements

can arise from fraud or error and are considered material if,

individually or in the aggregate, they could reasonably be

expected to influence the economic decisions of users taken

on the basis of these financial statements.

As part of an audit in accordance with SAs, we exercise

professional judgment and maintain professional skepticism

throughout the audit. We also:

• Identifyandassess the risksofmaterialmisstatementof the financial statements, whether due to fraud or

error, design and perform audit procedures responsive

to those risks, and obtain audit evidence that is sufficient

and appropriate to provide a basis for our opinion. The risk

of not detecting a material misstatement resulting from

fraud is higher than for one resulting from error, as fraud

may involve collusion, forgery, intentional omissions,

misrepresentations, or the override of internal control.

• Obtain an understanding of internal financial controlrelevant to the audit in order to design audit procedures

that are appropriate in the circumstances. Under

Section 143(3)(i) of the Act, we are also responsible for

expressing our opinion on whether the Company has

adequate internal financial controls system in place and

the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policiesused and the reasonableness of accounting estimates

and related disclosures made by the management.

• Concludeontheappropriatenessofmanagement’suseof the going concern basis of accounting and, based

on the audit evidence obtained, whether a material

uncertainty exists related to events or conditions that

may cast significant doubt on the Company’s ability

to continue as a going concern. If we conclude that a

material uncertainty exists, we are required to draw

attention in our auditor’s report to the related disclosures

in the financial statements or, if such disclosures are

inadequate, to modify our opinion. Our conclusions

are based on the audit evidence obtained up to the

date of our auditor’s report. However, future events or

conditions may cause the Company to cease to continue

as a going concern.

• Evaluatetheoverallpresentation,structureandcontentof the financial statements, including the disclosures,

and whether the financial statements represent the

underlying transactions and events in a manner that

achieves fair presentation.


Materiality is the magnitude of misstatements in the financial

statements that, individually or in aggregate, makes it probable

that the economic decisions of a reasonably knowledgeable

user of the financial statements may be influenced. We

consider quantitative materiality and qualitative factors in (i)

planning the scope of our audit work and in evaluating the

results of our work; and (ii) to evaluate the effect of any

identified misstatements in the financial statements.

We communicate with those charged with governance

regarding, among other matters, the planned scope and

timing of the audit and significant audit findings, including

any significant deficiencies in internal control that we identify

during our audit.

We also provide those charged with governance with a

statement that we have complied with relevant ethical

requirements regarding independence, and to communicate

with them all relationships and other matters that may

reasonably be thought to bear on our independence, and

where applicable, related safeguards.

From the matters communicated with those charged with

governance, we determine those matters that were of most

significance in the audit of the financial statements of the

current period and are therefore the key audit matters. We

describe these matters in our auditor’s report unless law or

regulation precludes public disclosure about the matter or

when, in extremely rare circumstances, we determine that

a matter should not be communicated in our report because

the adverse consequences of doing so would reasonably be

expected to outweigh the public interest benefits of such

communication.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act, based on our

audit we report that:

a) We have sought and obtained all the information and

explanations which to the best of our knowledge

and belief were necessary for the purposes of our

audit.

b) In our opinion, proper books of account as required

by law have been kept by the Company so far as it

appears from our examination of those books.

c) The Balance Sheet, the Statement of Profit and

Loss including Other Comprehensive Income,

the Cash Flow Statement and the Statement of

Changes in Equity dealt with by this Report are in

agreement with the relevant books of account.

d) In our opinion, the aforesaid financial statements

comply with the Ind AS specified under Section 133

of the Act.

e) On the basis of the written representations received

from the directors as on March 31, 2019 taken

on record by the Board of Directors, none of the

directors is disqualified as on March 31, 2019 from

being appointed as a director in terms of Section

164(2) of the Act.

f) With respect to the adequacy of the internal

financial controls over financial reporting of the

Company and the operating effectiveness of such

controls, refer to our separate Report in “Annexure

A”. Our report expresses an unmodified opinion on

the adequacy and operating effectiveness of the

Company’s internal financial controls over financial

reporting.

g) With respect to the other matters to be included

in the Auditor’s Report in accordance with the

requirements of Section 197(16) of the Act, as

amended, in our opinion and to the best of our

information and according to the explanations

given to us, the remuneration paid / provided by

the Company to its directors during the year is in

accordance with the provisions of Section 197 of

the Act.

h) With respect to the other matters to be included

in the Auditor’s Report in accordance with Rule 11

of the Companies (Audit and Auditors) Rules, 2014,

as amended in our opinion and to the best of our

information and according to the explanations given

to us:

i. The Company has disclosed the impact of

pending litigations on its financial position in

its financial statements.

ii. The Company did not have any long-term

contracts including derivative contracts for

which there were any material foreseeable

losses.

iii. There has been no delay in transferring

amounts, required to be transferred, to the

Investor Education and Protection Fund by the

Company.

2. As required by the Companies (Auditor’s Report) Order,

2016 (“the Order”) issued by the Central Government

in terms of Section 143(11) of the Act, we give in

“Annexure B” a statement on the matters specified in

paragraphs 3 and 4 of the Order.

For Deloitte Haskins & SellsChartered Accountants

(Firm’s Registration No. 008072S)

Sumit TrivediHyderabad Partner

May 2, 2019 (Membership No. 209354)


ANNEXURE “A” TO THE INDEPENDENT AUDITOR’S REPORT (Referred to in paragraph 1(f) under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial

reporting of International Paper APPM Limited (“the

Company”) as of March 31, 2019 in conjunction with our

audit of the financial statements of the Company for the year

ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing

and maintaining internal financial controls based on the

internal control over financial reporting criteria established

by the Company considering the essential components

of internal control stated in the Guidance Note on Audit of

Internal Financial Controls Over Financial Reporting issued

by the Institute of Chartered Accountants of India. These

responsibilities include the design, implementation and

maintenance of adequate internal financial controls that

were operating effectively for ensuring the orderly and

efficient conduct of its business, including adherence to

company’s policies, the safeguarding of its assets, the

prevention and detection of frauds and errors, the accuracy

and completeness of the accounting records, and the timely

preparation of reliable financial information, as required under

the Companies Act, 2013.

Auditor’s Responsibility

Our responsibility is to express an opinion on the Company’s

internal financial controls over financial reporting based on our

audit. We conducted our audit in accordance with the Guidance

Note on Audit of Internal Financial Controls Over Financial

Reporting (the “Guidance Note”) issued by the Institute of

Chartered Accountants of India and the Standards on Auditing

prescribed under Section 143(10) of the Companies Act,

2013, to the extent applicable to an audit of internal financial

controls. Those Standards and the Guidance Note require that

we comply with ethical requirements and plan and perform

the audit to obtain reasonable assurance about whether

adequate internal financial controls over financial reporting

was established and maintained and if such controls operated

effectively in all material respects.

Our audit involves performing procedures to obtain audit

evidence about the adequacy of the internal financial

controls system over financial reporting and their operating

effectiveness. Our audit of internal financial controls over

financial reporting included obtaining an understanding of

internal financial controls over financial reporting, assessing

the risk that a material weakness exists, and testing and

evaluating the design and operating effectiveness of internal

control based on the assessed risk. The procedures selected

depend on the auditor’s judgement, including the assessment

of the risks of material misstatement of the financial

statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is

sufficient and appropriate to provide a basis for our audit

opinion on the Company’s internal financial controls system

over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company’s internal financial control over financial reporting

is a process designed to provide reasonable assurance

regarding the reliability of financial reporting and the

preparation of financial statements for external purposes in

accordance with generally accepted accounting principles. A

company’s internal financial control over financial reporting

includes those policies and procedures that (1) pertain to the

maintenance of records that, in reasonable detail, accurately

and fairly reflect the transactions and dispositions of the

assets of the company; (2) provide reasonable assurance that

transactions are recorded as necessary to permit preparation

of financial statements in accordance with generally accepted

accounting principles, and that receipts and expenditures

of the company are being made only in accordance with

authorisations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention

or timely detection of unauthorised acquisition, use, or

disposition of the company’s assets that could have a material

effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial

controls over financial reporting, including the possibility of

collusion or improper management override of controls,

material misstatements due to error or fraud may occur and

not be detected. Also, projections of any evaluation of the

internal financial controls over financial reporting to future

periods are subject to the risk that the internal financial control

over financial reporting may become inadequate because of

changes in conditions, or that the degree of compliance with

the policies or procedures may deteriorate.

Opinion

In our opinion, to the best of our information and according to

the explanations given to us, the Company has, in all material

respects, an adequate internal financial controls system over

financial reporting and such internal financial controls over

financial reporting were operating effectively as at March 31,

2019, based on the criteria for internal financial control over

financial reporting established by the Company considering

the essential components of internal control stated in the

Guidance Note on Audit of Internal Financial Controls Over

Financial Reporting issued by the Institute of Chartered

Accountants of India.






ANNEXURE “B” TO THE INDEPENDENT AUDITOR’S REPORT (Referred to in paragraph 2 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)

(i) (a) The Company has maintained proper records showing

full particulars, including quantitative details and situation

of the fixed assets.

(b) The Company has a program of verification of

fixed assets to cover all the items in a phased

manner over a period of three years, which, in

our opinion, is reasonable having regard to the

size of the Company and the nature of its assets.

Pursuant to the program, certain fixed assets were

physically verified by the Management during the

year. According to the information and explanations

given to us, no material discrepancies were noticed

on such verification.

(c) According to the information and explanations

given to us and the records examined by us and

based on the examination of the registered sale

deed / transfer deed provided to us, we report

that, the title deeds, comprising all the immovable

properties of land and buildings which are freehold,

are held in the name of the Company as at the

balance sheet date.

(ii) As explained to us, the inventories were physically

verified during the year by the Management at reasonable

intervals and no material discrepancies were noticed on

physical verification.

(iii) The Company has not granted any loans, secured

or unsecured, to companies, firms, Limited Liability

Partnerships or other parties covered in the register

maintained under Section 189 of the Companies Act,

2013.

(iv) In our opinion and according to the information and

explanations given to us, and having regard to the legal

opinion obtained by the Company (refer foot notes to

Note 6 of the financial statements), on which we have

relied, the Company has complied with the provisions

of Section 185 and 186 of the Companies Act, 2013 in

respect of grant of loans. The Company has not made

investments, provided guarantees and securities.

(v) According to the information and explanations given to

us, the Company has not accepted any deposit during

the year. In respect of unclaimed deposits, the Company

has complied with the provisions of Sections 73 to 76

or any other relevant provisions of the Companies Act,

2013.

(vi) The maintenance of cost records has been specified

by the Central Government under Section 148(1) of

the Companies Act, 2013. We have broadly reviewed

the cost records maintained by the Company pursuant

to the Companies (Cost Records and Audit) Rules,

2014, as amended and prescribed by the Central

Government under sub-section (1) of the Section 148 of

the Companies Act, 2013 and are of the opinion that,

prima facie, the prescribed cost records have been

made and maintained. We have, however, not made a

detailed examination of the cost records with a view to

determine whether they are accurate or complete.

(vii) According to the information and explanations given to

us, in respect of statutory dues:

(a) The Company has been regular in depositing

undisputed statutory dues, including Provident

Fund, Employees’ State Insurance, Income-tax,

Sales Tax, Service Tax, Customs Duty, Excise

Duty, Value Added Tax, cess and other material

statutory dues applicable to it with the appropriate

authorities.

(b) There were no undisputed amounts payable in

respect of Provident Fund, Employees’ State

Insurance, Income-tax, Sales Tax, Service Tax,

Customs Duty, Excise Duty, Value Added Tax,

cess and other material statutory dues in arrears

as at March 31, 2019 for a period of more than six

months from the date they became payable.

(c) Details of dues of Income-tax, Sales Tax, Service

Tax, Custom Duty, Excise Duty and Value Added

Tax which have not been deposited as on March

31, 2019 on account of disputes are given below:

Name of StatuteNature of Dues

Forum where Dispute is pending

Period to which the amount relates

Amount

Involved (` lakhs)

Amount Unpaid

(` lakhs)

Income Tax Act,1961 Tax Commissioner of Income Tax

(Appeals), Visakhapatnam2010-11 and 2011-12 17.34 17.34

High Court of Andhra Pradesh 2001-02 to 2003-04 12.64 12.64

Income Tax Appellate Tribunal,

Hyderabad

2001-02 14.26 14.26

2008-09 40.08 40.08

Interest High Court of Andhra Pradesh 1979-80 24.96 24.96

Central Sales Tax Act, 1956 Tax Appellate Deputy Commissioner,

Visakhapatnam2008-09 21.54 21.54

Sales Tax Appellate Tribunal,


Andhra Pradesh General

Sales Tax Act, 1957 &

Central Sales Tax Act, 1956

TaxSales Tax Appellate Tribunal,

Visakhapatnam

1995-96 to

1999-200027.41 27.41

Andhra Pradesh General

Sales Tax Act, 1957

Tax High Court of Andhra Pradesh 1990-99 and 2000-05 126.78 126.78

Sales Tax Appellate Tribunal,



Name of StatuteNature of Dues

Forum where Dispute is pending

Period to which the amount relates

Amount

Involved (` lakhs)

Amount Unpaid

(` lakhs)

AP Value Added Tax Act,

2005

Penalty Appellate Deputy Commissioner,


Tax Sales Tax Appellate Tribunal,

Visakhapatnam2009 - 2011 23.66 11.84

Appellate Deputy Commissioner,

Visakhapatnam2012-13 and 2014-15 211.77 105.90

Penalty Appellate Deputy Commissioner,

Vijayawada2012-2015 21.17 18.52

Madhya Pradesh Value

Added Tax Act, 2002

TaxHigh Court, Madhya Pradesh 1997-98 15.00 15.00

West Bengal Value Added

Tax, 2005

Tax Additional Commissioner of

Commercial Taxes2009-10 1.78 1.78

Orissa Entry Tax Act, 1999 Tax Deputy Commissioner of

Commercial Taxes2006-07 to 2009-10 4.24 3.38

Central Excise Act, 1944 DutyHigh Court of Andhra Pradesh

1996-97 and 1997-98 10.90 10.90

February, 1994 0.36 0.36

Duty &

PenaltyCustoms, Excise & Service Tax

Appellate Tribunal, Bangalore

2001 to 2012 1,669.75 1,669.75

2005-06 to 2008-09 1,302.65 1,302.65

Commissioner of Central Excise

(Appeals), Visakhapatnam

2015 48.36 48.36

2006 140.36 140.36

2010-11 to 2015-16 0.23 0.23

High Court of Andhra Pradesh 2000-01 to 2007-08 385.15 385.15

Finance Act, 1994 Service

TaxHigh Court of Andhra Pradesh 2004-05 and 2005-06 51.10 51.10

Service

Tax &

Penalty

Commissioner of Central Excise

(Appeals), Visakhapatnam2004-05 to 2012-13 347.28 347.28

Customs, Excise & Service Tax

Appellate Tribunal, BangaloreMarch, 2012 105.11 105.11

(viii) In our opinion and according to the information and

explanations given to us, the Company has not defaulted

in the repayment of loans or borrowings to banks

and government. The Company has not issued any

debentures and does not have any borrowings from the

financial institutions.

(ix) The Company has not raised moneys by way of initial

public offer or further public offer (including debt

instruments) or term loans and hence reporting under

clause (ix) of the Order is not applicable.

(x) To the best of our knowledge and according to the

information and explanations given to us, no fraud by

the Company and no material fraud on the Company by

its officers or employees has been noticed or reported

during the year.

(xi) In our opinion and according to the information and

explanations given to us, the Company has paid / provided

managerial remuneration in accordance with the requisite

approvals mandated by the provisions of Section 197

read with Schedule V to the Companies Act, 2013.

(xii) The Company is not a Nidhi Company and hence

reporting under clause (xii) of the Order is not applicable.

(xiii) In our opinion and according to the information and

explanations given to us the Company is in compliance

with Section 177 and 188 of the Companies Act, 2013,

where applicable, for all transactions with the related

parties and the details of related party transactions

have been disclosed in the financial statements etc. as

required by the applicable Indian accounting standards.

(xiv) During the year the Company has not made any preferential

allotment or private placement of shares or fully or partly

convertible debentures and hence reporting under

clause (xiv) of Order is not applicable to the Company.

(xv) In our opinion and according to the information and

explanations given to us, during the year the Company

has not entered into any non-cash transactions with its

directors or directors of its holding or subsidiary company

or persons connected with him and hence provisions of

Section 192 of the Companies Act, 2013 are not applicable.

The Company does not have an associate company.

(xvi) The Company is not required to be registered under

section 45-IA of the Reserve Bank of India Act, 1934.






BALANCE SHEETas at March 31, 2019

(` in lakhs)

PARTICULARS NoteAs at

March 31, 2019As at

March 31, 2018A ASSETS

Non-current assets:(a) Property, plant and equipment 3 70,501.96 73,796.63 (b) Capital work-in-progress 3 843.37 419.44 (c) Intangible assets 4 242.95 369.36 (d) Financial assets

(i) Investments 5 1,558.00 1,464.50 (ii) Loans 6 14.14 21.51 (iii) Other financial assets 7 964.59 990.09

(e) Non-current tax assets (net) 13 751.94 920.12 (f) Other non-current assets 8 3,717.98 2,888.60 Total non-current assets 78,594.93 80,870.25 Current assets:(a) Inventories 9 15,699.66 15,477.89 (b) Financial assets

(i) Trade receivables 10 7,355.73 6,957.49 (ii) Cash and cash equivalents 11 1,465.01 1,601.05 (iii) Other bank balances 12 5,241.02 64.54 (iv) Loans 6 2,121.19 137.31 (v) Other financial assets 7 146.09 108.59

(c) Other current assets 8 7,353.51 3,790.45 39,382.21 28,137.32

Assets classified as held for sale 14 632.44 656.38 Total current assets 40,014.65 28,793.70 TOTAL ASSETS 118,609.58 109,663.95

B EQUITY AND LIABILITIESEquity:(a) Equity share capital 15 3,977.00 3,977.00 (b) Other equity 16 72,403.61 52,423.53 Total equity 76,380.61 56,400.53 LIABILITIES Non-current liabilities:(a) Financial liabilities

(i) Borrowings 17 1,254.08 6,479.58 (ii) Other financial liabilities 20 478.37 691.31

(b) Provisions 21 171.66 354.89 (c) Deferred tax liabilities (net) 23 13,961.02 9,734.31 Total non-current liabilities 15,865.13 17,260.09 Current Liabilities:(a) Financial liabilities

(i) Borrowings 18 - 11,600.00 (ii) Trade payables

(a) total outstanding dues of micro enterprisesand small enterprises

19 474.40 83.21

(b) total outstanding dues of creditors otherthan micro enterprises and small enterprises

19 16,614.19 13,147.79

(iii) Other financial liabilities 20 3,448.88 5,913.78 (b) Provisions 21 3,448.09 3,448.09 (c) Other current liabilities 22 2,378.28 1,810.46 Total current liabilities 26,363.84 36,003.33 Total liabilities 42,228.97 53,263.42 TOTAL EQUITY AND LIABILITIES 118,609.58 109,663.95 Corporate information & significant accounting policies 1 & 2See accompanying notes forming part of the financial statements

In terms of our report attached

For Deloitte Haskins & Sells For International Paper APPM LimitedChartered Accountants

Sumit Trivedi Donald P. DevlinPartner Chairman & Managing Director

Anish T. Mathew C.PrabhakarPlace: Hyderabad Vice President & Senior Vice President (Corporate Affairs) &

Date: May 2, 2019 Chief Financial Officer Company Secretary


STATEMENT OF PROFIT AND LOSSfor the year ended March 31, 2019

(` in lakhs)

PARTICULARS NoteYear ended

March 31, 2019 Year ended

March 31, 2018

1 Income:

(a) Revenue from operations 24 142,733.32 127,980.22

(b) Other income 25 1,458.84 529.40

Total income 144,192.16 128,509.62

2 Expenses:

(a) Cost of materials consumed 47,972.98 48,238.60

(b) Changes in inventories of finished goods and

work-in-progress26 (119.50) 1,650.66

(c) Excise duty expense (refer Note 52) - 1,579.65

(d) Employee benefits expense 27 15,268.02 15,220.17

(e) Finance costs 28 854.11 2,608.99

(f) Depreciation and amortisation expense 29 6,786.64 6,581.34

(g) Other expenses 30 41,754.13 39,147.98

Total Expenses 112,516.38 115,027.39

3 Profit before exceptional items and tax (1 - 2) 31,675.78 13,482.23

4 Exceptional items (net) (Refer note 54) (542.61) (836.56)

5 Profit before tax ( 3 + 4) 31,133.17 12,645.67

6 Tax expense :

(a) Current tax 31 11,330.03 3,279.32

(b) Deferred tax 31 (204.52) 1,059.64

11,125.51 4,338.96

7 Net profit after tax (5 - 6) 20,007.66 8,306.71

8 Other comprehensive income

(i) Items that will not be reclassified to profit or loss:

(a) Remeasurements of the defined benefit plans (152.63) (76.11)

(b) Equity instruments through other

comprehensive income93.50 453.36

(ii) Income tax relating to the items that will not be

reclassified to profit or loss:31.55 (78.26)

Total other comprehensive income / (loss) (27.58) 298.99

9 Total comprehensive income (7 + 8) 19,980.08 8,605.70

Earnings per share (Face value of ` 10 each) Basic &

Diluted - `38 50.31 20.89

Corporate information & significant accounting policies 1 & 2

See accompanying notes forming part of the financial

statements







STATEMENT OF CHANGES IN EQUITYfor the year ended March 31, 2019

(a) Equity share capital (` in lakhs)

Number of shares Amount

Balance as at April 1, 2017 39,770,039 3,977.00

Changes in equity share capital during the year - -

Balance as at March 31, 2018 39,770,039 3,977.00

Changes in equity share capital during the year - -

Balance as at March 31, 2019 39,770,039 3,977.00

(b) Other equity (` in lakhs)

Particulars

Reserves and surplusItems of other

comprehensive income

Total

Security premium

Capital redemption

reserve

General reserve

Retained earnings

Equity instrument

through other comprehensive

income

Balance as at April 1, 2017 18,211.13 598.00 28,876.29 (3,458.15) (409.43) 43,817.84

Profit for the year - - - 8,306.71 - 8,306.71

Remeasurements of the defined

benefit plans (net of tax)- - - (49.78) - (49.78)

Changes in fair value (net of tax) - - - - 348.76 348.76

Balance as at March 31, 2018 18,211.13 598.00 28,876.29 4,798.78 (60.67) 52,423.53

Profit for the year - - - 20,007.66 - 20,007.66

Transfer to retained earnings

(refer Note 50)- - (28,876.29) 28,876.29 - -

Remeasurements of the defined

benefit plans (net of tax)- - - (99.30) - (99.30)

Changes in fair value (net of tax) - - - - 71.72 71.72

Balance as at March 31, 2019 18,211.13 598.00 - 53,583.43 11.05 72,403.61

See accompanying notes forming part of the financial statements







CASH FLOW STATEMENTfor the year ended March 31, 2019

(` in lakhs)

PARTICULARSYear ended

March 31, 2019Year ended

March 31, 2018

A. Cash flow from operating activities

Profit before tax after exceptional items 31,133.17 12,645.67

Adjustments for:

Depreciation and amortisation expense 6,786.64 6,581.34

Loss on sale / scrap of property, plant and equipment's (net) 174.46 420.09

Finance costs recognised in profit or loss 854.11 2,608.99

Interest income recognised in profit and loss (303.90) (242.19)

Notional lease rental on embedded finance lease (268.25) (268.25)

Net (gain) / loss arising on financial assets measured at fair

value through profit or loss(2.79) 3.45

Bad trade receivables and advances written-off (net) - 0.29

Provision/write off for doubtful trade receivables and advances 3.19 11.75

Liabilities / provisions no longer required written back (630.34) (20.00)

Exceptional items 542.61 836.56

Net unrealised foreign exchange (gain) / loss 18.36 (20.62)

Operating profit before working capital changes 38,307.26 22,557.08

Changes in working capital:

Adjustments for (increase) / decrease in operating assets:

Inventories (221.77) 2,906.21

Trade receivables (361.77) (217.36)

Loans 23.49 (14.71)

Other assets (3,947.52) (796.38)

Other financial assets (31.47) 77.67

Changes in balances held as margin money / security for bank

guarantees- 16.35

Adjustments for increase / (decrease) in operating liabilities:

Trade payables 3,973.33 (560.15)

Other financial liabilities 271.06 125.55

Other liabilities 25.21 (70.62)

Provisions (335.86) (167.60)

Cash generated from operations 37,701.96 23,856.04

Income tax paid (net of refunds) (6,699.07) (2,345.64)

Net cash generated by operating activities (A) 31,002.89 21,510.40

B. Cash flows from investing activities

Purchase of property, plant and equipment (including capital work-

in-progress and other intangible assets)(4,157.42) (3,341.32)

Proceeds from sale of property, plant and equipment (including

assets held for sale)22.69 15.11

Inter-corporate deposits given (3,000.00) -

Inter-corporate deposits matured 1,000.00 -

Bank balances not considered as cash and cash equivalents (5,177.95) (36.97)

Interest received 319.65 235.76

Net cash used in investing activities (B) (10,993.03) (3,127.42)


CASH FLOW STATEMENT (Cont.....)for the year ended March 31, 2019

(` in lakhs)

PARTICULARSYear ended


March 31, 2018

C. Cash flow from financing activities

Proceeds from long-term borrowings - 5,000.00

Proceeds from short-term borrowings 4,000.00 21,100.00

Repayment of long-term borrowings (including current maturities of

the same)(7,672.28) (22,439.08)

Repayment of short-term borrowings (15,600.00) (18,500.00)

Finance costs (859.80) (2,619.39)

Net cash used in financing activities (C) (20,132.08) (17,458.47)

Net increase/(decrease) in Cash and cash equivalents (A+B+C) (122.22) 924.51

Cash and cash equivalents at the beginning of the year 1,601.05 677.31

Effect of exchange rate changes on cash and cash equivalents held in

foreign currencies(13.82) (0.77)

Cash and cash equivalents at the end of the year (Refer note 11) 1,465.01 1,601.05

Reconciliation of Financial Liabilities - Borrowings

ParticularsAs at

April 01, 2018Proceeds Repayments

As at March 31, 2019

Current and non current borrowings,

including current maturities20,751.86 4,000.00 (23,272.28) 1,479.58

See accompanying notes forming part of the financial statements







NOTES forming part of the financial statements

1. General information

International Paper APPM Limited (“IPAPPM”/“the

Company”) is an integrated paper and pulp

manufacturer. The equity shares of the Company are

listed on Bombay Stock Exchange and the National

Stock Exchange in India. IPAPPM was incorporated on

June 29, 1964.

In October 2011, International Paper Company, USA,

through IP Holding Asia Singapore Pte. Limited acquired

controlling stake in the Company from the erstwhile

promoters and public shareholders.

The addresses of its registered office and principal place

of business are disclosed in the introduction to the annual

report. IPAPPM owns and operates two manufacturing

units located in the State of Andhra Pradesh, India, one

at Rajamahendravaram and the other at Kadiyam in East

Godavari District.

2. Significant accounting policies

A. Statement of compliance

The financial statements which comprise the

Balance sheet, the Statement of Profit and Loss,

the Cash flow statement and the Statement

of changes in Equity (“Financial Statements”)

have been prepared in accordance with Indian

Accounting Standards (Ind ASs) notified under

Section 133 of the Companies Act, 2013, read

together with the Companies (Indian Accounting

Standards) Rules, 2015 and relevant amendment

rules issued thereafter. Except for the changes

below, the Company has consistently applied

accounting policies to all periods.

The Company has adopted Ind AS 115 ‘Revenue

from Contracts with Customers’ with the date

of initial application being April 01, 2018. Ind AS

115 established a comprehensive framework

on revenue recognition and replaces Ind AS 18 –

Revenue and Ind AS 11 – Construction Contracts.

There are no material adjustments arising on

transition.

On March 28, 2018, Ministry of Corporate

Affairs (“MCA”) notified the Companies (Indian

Accounting Standards) Amendment Rules, 2018

containing Appendix B to Ind AS 21, Foreign

currency transactions and advance consideration

which clarified the date of the transaction for the

purpose of determining the exchange rate to use

on initial recognition of the related asset, expense

or income, when an entity has received or paid

consideration in a foreign currency. The Company

has evaluated the effect of this amendment on the

financial statements and concluded that the impact

is not material.

B. Basis of preparation and presentation

The financial statements have been prepared on

accrual basis and on the historical cost convention

except for certain financial instruments that are

measured at fair values at the end of each reporting

period, as explained in the accounting policies set

out below.

Historical cost is generally based on the fair value of

the consideration given in exchange for goods and

services.

Fair value is the price that would be received

to sell an asset or paid to transfer a liability in an

orderly transaction between market participants

at the measurement date, regardless of whether

that price is directly observable or estimated using

another valuation technique. In estimating the fair

value of an asset or a liability, the Company takes

into account the characteristics of the asset or

liability if market participants would take those

characteristics into account when pricing the asset

or liability at the measurement date. Fair value for

measurement and/or disclosure purposes in these

financial statements is determined on such a basis,

except for share-based payment transactions

that are within the scope of Ind AS 102, leasing

transactions that are within the scope of Ind AS

17, and measurements that have some similarities

to fair value but are not fair value, such as net

realisable value in Ind AS 2 or value in use in Ind

AS 36. In addition, for financial reporting purposes,

fair value measurements are categorised into Level

1, 2, or 3 based on the degree to which the inputs

to the fair value measurements are observable

and the significance of the inputs to the fair value

measurement in its entirety, which are described as

follows:

• Level1inputsarequotedprices(unadjusted)inactive markets for identical assets or liabilities

that the entity can access at the measurement

date;

• Level 2 inputs are inputs, other than quotedprices included within Level 1, that are

observable for the asset or liability, either

directly or indirectly;

• Level3inputsareunobservableinputsfortheasset or liability.

The principal accounting policies are set out below.

C. Use of estimates and judgements

The preparation of the financial statements in

conformity with Ind AS requires Management to

make judgements, estimates and assumptions that

affect the application of the accounting policies

and the reported amounts of assets and liabilities,

income and expenses. Actual results may differ

from those estimates.


The estimates and underlying assumptions are

reviewed on an ongoing basis. Revisions to

accounting estimates are recognised in the period

in which the estimates are revised and in any future

periods affected.

The following are the critical judgements and

estimates that have been made in the process of

applying the Company’s accounting policies that

have the most significant effect on the amounts

recognised in the financial statements.

a) Useful lives of Property, plant and equipment

Property, plant and equipment represent a

significant proportion of the asset base of the

Company. The charge in respect of periodic

depreciation is derived after determining

an estimate of an asset’s expected useful

life and the expected residual value at the

end of its life. The useful lives and residual

values of Company’s assets are determined

by Management at the time the asset is

acquired and is reviewed at the end of each

reporting period. The lives are based on

historical experience with similar assets as

well as anticipation of future events, which

may impact their life, such as changes in

technology. This reassessment may result

in change in depreciation expense in future

periods.

b) Fair value measurement of financial instruments

Some of the Company’s assets and liabilities

are measured at fair value for financial

reporting purposes. In estimating the fair

value of an asset or liability, the Company

uses market-observable data to the extent

available. Where Level 1 inputs are not

available, the fair value is measured using

valuation techniques, including the discounted

cash flow model, which involves various

judgments and assumptions. The Company

also engages third party qualified valuers to

perform the valuation in certain cases. The

appropriateness of valuation techniques and

inputs to the valuation model are reviewed by

the Management.

c) Income taxes

The Company’s tax jurisdiction is India.

Significant judgements are involved in

estimating budgeted profits for the purpose of

paying advance tax, determining the provision

for income taxes, including amount expected

to be paid / recovered for uncertain tax

positions.

d) Defined benefit obligations

The Company uses actuarial assumptions viz.,

discount rate, mortality rates, salary escalation

rate etc., to determine such employee benefit

obligations.

e) Claims, provisions and contingent liabilities

The Company has ongoing litigations with

various regulatory authorities and third parties.

Where an outflow of funds is believed to

be probable and a reliable estimate of the

outcome of the dispute can be made based

on management’s assessment of specific

circumstances of each dispute and relevant

external advice, management provides for its

best estimate of the liability. Such accruals

are by nature complex and can take number

of years to resolve and can involve estimation

uncertainty. Information about such litigations

is disclosed in notes to the financial

statements.

f) Other estimates

The preparation of financial statements

involves estimates and assumptions that

affect the reported amount of assets, liabilities,

disclosure of contingent liabilities at the date

of financial statements and the reported

amount of revenues and expenses for the

reporting period. Specifically, the Company

estimates the probability of collection of

accounts receivable by analysing historical

payment patterns, customer concentrations,

customer credit-worthiness and current

economic trends. If the financial condition of

a customer deteriorates, additional allowances

may be required.

D. Inventories

Inventories are valued at the lower of cost and net

realizable value after providing for obsolescence

and other losses, where considered necessary.

Cost includes all charges in bringing the goods to

the point of sale. Net realisable value represents

the estimated selling price for inventories less all

estimated costs of completion and costs necessary

to make the sale.

The method of determining cost of various

categories of inventories is as follows:

Raw materials

(including packing

materials)

Weighted average cost

Stores and spares Weighted average cost

Work-in-progress

and finished goods

(manufactured)

Weighted average cost

of production which

comprises of direct

material costs, direct

wages and applicable

overheads. Excise duty

is included in the value

of finished goods, as

applicable

Stock-in-trade Weighted average cost


E. Property, plant and equipment and Capital work in progress

Property, plant and equipment are measured at

cost less accumulated depreciation and impairment

losses, if any. Cost comprises the purchase price

net of any trade discounts and rebates, any

import duties and other taxes (other than those

subsequently recoverable from the tax authorities),

any directly attributable expenditure in making

the asset ready for its intended use and cost

of borrowing till the date of capitalisation in the

case of assets involving material investment and

substantial lead time.

An item of Property, plant and equipment is de-

recognised upon disposal or when no future

economic benefits are expected to arise from the

continued use of asset. Any gain/loss arising on the

disposal or retirement of an item of Property, plant

and equipment is determined as the difference

between the sale proceeds and the carrying amount

of the asset and is recognised in the statement of

profit or loss.

Depreciation

Depreciation on buildings is provided on the straight-

line method as per the useful life prescribed in

Schedule II to the Companies Act, 2013.

Depreciation on plant and equipment is provided

on straight-line method over 10-25 years, based

on the useful life assessed as per technical

assessment, taking into account the nature of

asset, the estimated usage of the asset, the

operating conditions of the asset, past history of

replacement, anticipated technological changes,

maintenance report etc.

Depreciation on other tangible fixed assets viz.

furniture and fixtures, office equipment and

vehicles is provided on written down value method

as per the useful life prescribed in Schedule II of the

Companies Act, 2013.

The estimated useful lives, residual values and

depreciation method are reviewed at the end

of each reporting period, with the effect of any

changes in estimate accounted for on a prospective

basis.

Assets acquired under finance lease are depreciated

over their expected useful lives on the same basis

as owned assets. Leasehold improvements are

amortised over the lower of estimated useful life

and lease term.

Assets individually costing ` 15,000 and below are

fully depreciated in the year of acquisition.

F. Intangible Assets

Intangible assets are carried at cost, net of

accumulated amortisation and impairment losses,

if any. Cost of an intangible asset comprises of

purchase price and attributable expenditure on

making the asset ready for its intended use.

Intangible assets are amortised on the straight line

method over their estimated useful life.

An intangible asset is derecognized on disposal, or

when no future economic benefits are expected

from use or disposal. Gains or losses arising from

de-recognition of an intangible asset, measured as

the difference between the net disposal proceeds

and the carrying amount of the asset, are recognised

in profit or loss when the asset is derecognized.

G. Impairment

a) Financial assets

In accordance with Ind AS 109, the Company

applies expected credit loss (ECL) model for

measurement and recognition of impairment

loss. The Company follows ‘simplified

approach’ for recognition of impairment

loss allowance on trade receivables. The

application of simplified approach does not

require the Company to track changes in

credit risk. Rather, it recognises impairment

loss allowance based on lifetime ECLs at each

reporting date, right from its initial recognition.

For recognition of impairment loss on other

financial assets and risk exposure, the

Company determines whether there has

been a significant increase in the credit risk

since initial recognition. If credit risk has not

increased significantly, 12-month ECL is used

to provide for impairment loss. However, if

credit risk has increased significantly, lifetime

ECL is used. If in subsequent period, credit

quality of the instrument improves such that

there is no longer a significant increase in

credit risk since initial recognition, then the

entity reverts to recognising impairment loss

allowance based on 12 month ECL.

Lifetime ECLs are the expected credit losses

resulting from all possible default events over

the expected life of a financial instrument. The

12 month ECL is a portion of the lifetime ECL

which results from default events that are

possible within 12 months after the reporting

date.

ECL is the difference between all contractual

cash flows that are due to the Company in

accordance with the contract and all the cash

flows that the entity expects to receive (i.e. all

shortfalls), discounted at the original Effective

Interest Rate (EIR). When estimating the cash

flows, an entity is required to consider:

(i) All contractual terms of the financial

instrument (including prepayment,

extension etc.) over the expected life

of the financial instrument. However, in

rare cases when the expected life of the

financial instrument cannot be estimated

reliably, then the entity is required to use

the remaining contractual term of the

financial instrument.


(ii) Cash flows from the sale of collateral

held or other credit enhancements that

are integral to the contractual terms.

As a practical expedient, the Company

uses a provision matrix to determine

impairment loss on portfolio of its trade

receivables. The provision matrix is

based on its historically observed default

rates over the expected life of the trade

receivables and is adjusted for forward-

looking estimates. At every reporting

date, the historical observed default rates

are updated and changes in forward-

looking estimates are analysed.

ECL impairment loss allowance (or

reversal) recognised during the period

is recognised as income/expense in

the Statement of Profit and Loss. ECL

is presented as an allowance, i.e. as

an integral part of the measurement of

those assets in the Balance Sheet.

b) Non-financial assets

The Company assesses at each reporting date

whether there is any objective evidence that a

non-financial asset or a group of non-financial

assets is impaired. If any such indication

exists, the Company estimates the amount of

impairment loss.

An impairment loss is calculated as the

difference between an asset’s carrying

amount and recoverable amount. Losses are

recognised in the Statement of Profit and Loss

and reflected in an allowance account. When

the Company considers that there are no

realistic prospects of recovery of the asset the

relevant amounts are written off. If the amount

of impairment loss subsequently decreases

and the decrease can be related objectively to

an event occurring after the impairment was

recognised then the previously recognised

impairment loss is reversed through the

Statement of Profit and Loss.

The recoverable amount of an asset or cash

generating unit is the greater of its value in use

and its fair value less costs to sell. In assessing

value in use, the estimated future cash flows

are discounted to their present value using

the pre-tax discount rate that reflects current

market assessments of the time value of

money and the risks specific to the asset.

For the purpose of impairment testing assets

are grouped together into the smallest group

of assets that generate cash inflows from

continuing use that are largely independent of

the cash inflows of other assets or group of

asset (“the cash generating unit”).

H. Functional and presentation currency

Items included in the financial statements of the

Company are measured using the currency of

the primary economic environment in which the

entity operates (i.e. the “functional currency”).

The financial statements are presented in Indian

Rupee (`), the national currency of India, which is

the functional currency of the Company.

I. Foreign currency transactions and translations

Foreign currency transactions are recorded at

exchange rates prevailing on the date of the

transaction or at rates that closely approximate

the rate at the date of transactions. The date of

transaction for the purpose of determining the

exchange rate on initial recognition of the related

asset, expense or income (part of it) is the date

on which the entity initially recognises the non-

monetary asset or non-monetary liability arising

from payment or receipt of advance consideration.

Foreign currency denominated monetary assets

and liabilities are restated into the functional

currency using exchange rates prevailing on the

balance sheet date. Gains and losses arising on

settlement and restatement of foreign currency

denominated monetary assets and liabilities are

recognised in the statement of profit and loss. Non-

monetary assets and liabilities that are measured in

terms of historical cost in foreign currencies are not

translated.

J. Government grants

Government grants are not recognised until there

is reasonable assurance that the Company will

comply with the conditions attached to them and

that the grants will be received.

Government grants related to revenue are

recognised on a systematic basis in the Statement

of Profit and Loss over the periods necessary to

match them with the related costs which they are

intended to compensate. Such grants are deducted

in reporting the related expense, as applicable.

When the grant relates to an asset, it is recognised

as deferred revenue in the Balance Sheet and

transferred to the Statement of Profit and Loss on

a systematic and rational basis over the useful lives

of the related assets.

The benefit of a government loan at a below-market

rate of interest is treated as a government grant

and measured as the difference between proceeds

received and the fair value of the loan based on

prevailing market interest rates.

K. Borrowing costs

Borrowing costs directly attributable to the

acquisition, construction or production of qualifying

assets, which are assets that necessarily take

a substantial period of time to get ready for their

intended use or sale, are added to the cost of

those assets, until such time as the assets are

substantially ready for their intended use or sale.

Interest income earned on the temporary

investment of specific borrowings pending their

expenditure on qualifying assets is deducted from

the borrowing costs eligible for capitalization.


All other borrowing costs are recognised in profit or

loss in the period in which they are incurred.

L. Employee benefits

a) Defined contribution plans

Employee benefits in the form of provident

fund, superannuation, employees’ state

insurance fund and labour welfare fund are

considered as defined contribution plans and

the contributions are charged to the profit and

loss during the year when the contributions to

the respective funds are due and as and when

services are rendered by employees.

Provident fund

Eligible employees receive benefits from a

provident fund. Both the employee and the

Company make monthly contributions to

the provident fund plan equal to a specified

percentage of the covered employee’s salary.

Rajahmundry unit of the Company makes the

contributions to ‘The Employee’s Provident

Fund of The Andhra Pradesh Paper Mills

Limited’ trust maintained by the Company,

and for other locations the contributions

are made to Regional Provident Fund

Commissioner. The rate at which the annual

interest is payable to the beneficiaries by the

trust is determined by the Government. The

Company has an obligation to make good

the shortfall, if any, between the return from

the investments of the trust and the notified

interest rate. The Company has no further

obligations.

Superannuation

Certain employees of the Company are

participants in the superannuation plan (‘the

Plan’) which is a defined contribution plan. The

Company contributes to the superannuation

fund maintained with an Insurer.

b) Defined benefit plans

Gratuity

In accordance with the Payment of Gratuity

Act, 1972, as amended, the Company

provides for gratuity, a defined benefit

retirement plan (‘the Gratuity Plan’) covering

eligible employees. The Gratuity Plan provides

a lump-sum payment to vested employees at

retirement, death, incapacitation or termination

of employment, of an amount based on the

respective employee’s salary and the tenure

of employment with the Company. Liabilities

with regard to the Gratuity Plan are determined

by actuarial valuation at each Balance Sheet

date using the projected unit credit method.

The Company fully contributes all ascertained

liabilities to the gratuity fund maintained with

the Insurer.

Defined benefit costs are categorised as

follows:

a. service cost (including current service

cost, past service cost, as well as

gains and losses on curtailments and

settlements);

b. net interest expense or income; and

c. re-measurement

The Company presents the first two

components of defined benefit costs in profit

or loss in the line item ‘Employee benefits

expense’. Curtailment gains and losses are

accounted for as past service costs. Net

interest is calculated by applying the discount

rate at the beginning of the period to the net

defined benefit liability or asset.

Remeasurement, comprising actuarial gains

and losses, the effect of the changes to the

asset ceiling (if applicable) and the return

on plan assets (excluding net interest), is

reflected immediately in the balance sheet

with a charge or credit recognised in other

comprehensive income in the period in which

they occur. Remeasurement recognised in

other comprehensive income is reflected

immediately in retained earnings and is not

reclassified to profit or loss.

c) Short-term and other long-term employee benefits

The employees of the Company are entitled

to compensated absences. The employees

can carry forward a portion of the unutilised

accumulating compensated absences and

utilise it in future periods or receive cash at

retirement or termination of employment.

The Company records an obligation for

compensated absences in the period in

which the employee renders the services

that increases this entitlement. The Company

measures the expected cost of compensated

absences as the additional amount that the

Company expects to pay as a result of the

unused entitlement that has accumulated at

the end of the reporting period. The Company

fully contributes all ascertained liabilities

to the fund maintained with the Insurer.

The Company recognises accumulated

compensated absences based on actuarial

valuation. Non-accumulating compensated

absences are recognised in the period in

which the absences occur.

M. Revenue recognition

a) Sale of goods

Revenue is recognised upon transfer of

promised goods or services to customers in

an amount that reflects the consideration the

Company expects to receive in exchange for

those goods or services. Revenue is reduced

for estimated customer returns, rebates and


other similar allowances, taxes or duties

collected on behalf of the government. An

entity shall recognise revenue when the

entity satisfies a performance obligation by

transferring a goods or services (i.e an asset)

to a customer. An asset is transferred when

the customer obtains control of that asset.

b) Export benefits

Export benefits are recognised on an accrual

basis and when there is a reasonable certainty

of realisation of such benefits / incentives.

c) Other income

Dividend income from investments is

recognised when the shareholder’s right to

receive payment has been established.

Interest income is accrued on a time basis, by

reference to the principal outstanding and at

the effective interest rate applicable, which

is the rate that exactly discounts estimated

future cash receipts through the expected

life of the financial asset to that asset’s net

carrying amount on initial recognition.

d) Insurance and other claims/refunds are

accounted for as and when admitted by

appropriate authorities.

N. Financial Instruments

A financial instrument is any contract that gives rise

to a financial asset of one entity and a financial liability

or equity instrument of another entity. Financial

assets and financial liabilities are recognised when

the Company becomes a party to the contractual

provisions of the instruments. Financial assets and

financial liabilities are initially measured at fair value.

Transaction costs that are directly attributable

to the acquisition or issue of financial assets and

financial liabilities (other than financial assets and

financial liabilities at fair value through profit or loss)

are added to or deducted from the fair value of the

financial asset or financial liabilities, as appropriate,

on initial recognition. Transaction costs directly

attributable to the acquisition of financial asset or

financial liabilities at fair value through profit or loss

are recognised immediately in the Statement of the

Profit and Loss. While, loans and borrowings and

payables are recognised net of directly attributable

transaction costs.

Purchase or sales of financial assets that require

delivery of assets within a time frame established

by regulation or convention in the market place

(regular way trade) are recognised on trade date.

For the purpose of subsequent measurement,

financial instruments of the Company are classified

in the following categories: Non-derivative financial

assets comprising amortised cost, investments

in subsidiaries, equity instruments at fair value

through other comprehensive income (FVTOCI) or

fair value through profit or loss (FVTPL) and non-

derivative financial liabilities at amortised cost.

Management determines the classification of its

financial instruments at initial recognition.

The classification of financial instruments depends

on the objective of the Company’s business model

for which it is held and on the substance of the

contractual terms / arrangements.

a) Non - derivative financial assets

i. Financial assets at amortised cost

A financial asset shall be measured at

amortised cost if both of the following

conditions are met:

- the financial asset is held within a

business model whose objective is to

hold financial assets in order to collect

contractual cash flows; and

- the contractual terms of the financial

asset give rise on specified dates to

cash flows that are solely payments of

principal and interest on the principal

amount outstanding.

They are presented as current assets, except

for those maturing later than 12 months

after the reporting date which are presented

as non-current assets. Financial assets are

measured initially at fair value plus transaction

costs and subsequently carried at amortized

cost using the effective interest method, less

any impairment loss.

Financial assets at amortised cost are

represented by trade receivables, security

deposits, cash and cash equivalents, loans

/ Inter-Corporate deposits given / placed and

eligible current and non-current assets.

Cash comprises cash on hand, cash at bank,

cheques on hand and demand deposits

with banks. Cash equivalents are short-term

balances (with an original maturity of three

months or less from the date of acquisition),

highly liquid investments that are readily

convertible into known amounts of cash

and which are subject to insignificant risk of

changes in value.

ii. Investments in subsidiaries

On initial recognition, these instruments

are recognised at fair value plus any directly

attributable transaction costs. Subsequently

they are measured at cost.

iii. Investments in Equity instruments at FVTOCI

On initial recognition, the Company can make

an irrevocable election (on an instrument-by-

instrument basis) to present the subsequent

changes in fair value in other comprehensive

income (OCI) pertaining to investments in equity

instruments. This election is not permitted if

the equity investment is held for trading. These


elected investments are initially measured at

fair value plus transaction costs. Subsequently,

they are measured at fair value with gains

and losses arising from changes in fair value

recognised in other comprehensive income

and accumulated in the “equity instruments

through other comprehensive income”. The

cumulative gain or loss is not reclassified to

profit or loss on disposal of the investments.

A financial asset is held for trading if:

- It has been acquired principally for the

purpose of selling it in the near term; or

- On initial recognition it is part of a portfolio

of identified financial instruments that the

Company manages together and has a

recent actual pattern of short-term profit-

taking; or

- It is a derivative that is not designated

and effective as a hedge instrument or a

financial guarantee.

Dividends on these investments in equity

instruments are recognised in the Statement

of Profit and Loss when the Company’s right

to receive the dividends is established and the

amount of dividend can be measured reliably.

iv. Financial assets at fair value through profit or loss (FVTPL)

FVTPL is a residual category for financial

assets. A financial asset which does not meet

the criteria for categorization as at amortised

cost or as FVTOCI, is classified as FVTPL.

In addition, the Company may elect to

designate the financial asset, which otherwise

meets amortised cost or FVTOCI criteria, as

FVTPL if doing so eliminates or significantly

reduces a measurement or recognition

inconsistency.

Financial assets included within the FVTPL

category are measured at fair value at the end

of each reporting period, with any gains or

losses arising on re-measurement recognised

in the Statement of Profit and Loss. The net

gain or loss recognised in the Statement of

Profit and Loss incorporates any dividend or

interest earned on the financial asset and is

included in the ‘Other income’ line item.

De-recognition of financial assets

The Company de-recognises financial assets when

the contractual right to the cash flows from the asset

expires or when it transfers the financial asset and

substantially all the risks and rewards of ownership

of the asset to another party. On de-recognition

of a financial asset (except as mentioned above

for financial assets measured at FVTOCI), the

difference between the carrying amount and the

consideration received and receivable is recognised

in the Statement of Profit and Loss.

b) Non-derivative financial liabilities

i. Financial liabilities at fair value through profit or loss (FVTPL)

Financial liabilities at FVTPL are stated at fair

value, with any gains or losses arising on re-

measurement recognised in profit or loss. The

net gain or loss recognised in profit or loss

incorporates any interest paid on the financial

liability and is included in the ‘Other income’

line item.

ii. Financial liability subsequently measured at amortised cost

Financial liabilities at amortised cost

represented by borrowings, trade and other

payables are initially recognized at fair value,

and subsequently measured at amortised cost

using the effective interest method.

The effective interest method is a method of

calculating the amortised cost of a financial

liability and of allocating interest expense over

the relevant period. The effective interest rate

is the rate that exactly discounts estimated

future cash payments through the expected life

of the financial liability, or (where appropriate)

a shorter period, to the net carrying amount on

initial recognition.

De-recognition of financial liabilities

The Company de-recognises financial liabilities,

when and only when, the Company’s obligations

are discharged, cancelled or have expired. The

difference between the carrying amount of

the financial liabilities de-recognised and the

consideration paid and payable is recognised in the

Statement of Profit and Loss.

O. Leases

Finance Lease

Leases are classified as finance leases whenever

the terms of the lease transfer substantially all the

risks and rewards of ownership to the lessee. All

other leases are classified as operating leases.

Assets held under finance leases are initially

recognised as assets of the Company at their fair

value at the inception of the lease or, if lower, at the

present value of the minimum lease payments. The

corresponding liability to the lessor is included in

the balance sheet as a finance lease obligation.

Operating Lease

Lease arrangements where the risks and rewards

incidental to ownership of an asset substantially

vest with the lessor, are recognised as operating

lease. Operating lease payments are recognised

on a straight line basis over the lease term in the

Statement of Profit and Loss, unless the lease

agreement explicitly states that increase is on

account of inflation.


P. Taxation

Income tax expense represent the sum of the

current tax and deferred tax.

i. Current tax

Current tax is determined as the amount of

tax payable in respect of the taxable income

for the year as determined in accordance with

the applicable tax rates and the provisions

of the Income-tax Act, 1961. Taxable profit

differs from ‘profit before tax’ as reported in

the statement of profit and loss because of

items of income or expense that are taxable

or deductible in other years and items that

are never taxable or deductible under the

Income-tax Act, 1961. The tax rates and tax

laws used to compute the current tax amount

are those that are enacted or substantively

enacted by the reporting date and applicable

for the period. The Company offsets current

tax assets and current tax liabilities, where it

has a legally enforceable right to set off the

recognized amounts and where it intends

either to settle on a net basis or to realize the

asset and liability simultaneously.

ii. Deferred Tax

Deferred tax is recognised on temporary

differences between the carrying amounts of

assets and liabilities in the financial statements

and the corresponding tax bases used in

the computation of taxable profit. Deferred

tax liabilities are generally recognised for

all taxable temporary differences. Deferred

tax assets are generally recognised for all

deductible temporary differences to the extent

that it is probable that taxable profits will be

available against which those deductible

temporary differences can be utilised. Such

deferred tax assets and liabilities are not

recognised if the temporary difference arises

from the initial recognition (other than in a

business combination) of assets and liabilities

in a transaction that affects neither the taxable

profit nor the accounting profit. In addition,

deferred tax liabilities are not recognised if

the temporary difference arises from the initial

recognition of goodwill.

The carrying amount of deferred tax assets is

reviewed at the end of each reporting period

and reduced to the extent that it is no longer

probable that sufficient taxable profits will be

available to allow all or part of such deferred

tax assets to be utilised.

Deferred tax assets include Minimum

Alternate Tax (MAT) paid in accordance with

the tax laws in India, which gives future

economic benefits in the form of availability

of set-off against future income tax liability.

Accordingly, MAT is recognized as a deferred

tax asset in the Balance Sheet when the asset

can be measured reliably and it is probable

that the future economic benefits associated

with it will be realised.

Deferred tax liabilities and assets are measured

at the tax rates that are expected to apply in

the period in which the liability is settled or

the asset realised, based on tax rates (and tax

laws) that have been enacted or substantively

enacted by the end of the reporting period.

Current and deferred tax are recognised in

profit or loss, except when they relate to items

that are recognised in other comprehensive

income or directly in equity, in which case, the

current and deferred tax are also recognised

in other comprehensive income or directly in

equity respectively.

Q. Provisions, contingent liabilities and contingent assets

Provisions are recognised when the Company has a

present obligation (legal or constructive) as a result

of a past event, it is probable that the Company

will be required to settle the obligation, and a

reliable estimate can be made of the amount of the

obligation.

The amount recognised as a provision is the best

estimate of the consideration required to settle the

present obligation at the end of the reporting period,

taking into account the risks and uncertainties

surrounding the obligation. When a provision is

measured using the cash flows estimated to settle

the present obligation, its carrying amount is the

present value of those cash flows (when the effect

of the time value of money is material).

When some or all of the economic benefits required

to settle a provision are expected to be recovered

from a third party, a receivable is recognised as an

asset if it is virtually certain that reimbursement will

be received and the amount of the receivable can

be measured reliably.

A disclosure for a contingent liability is made when

there is a possible obligation or a present obligation

that may, but probably will not require an outflow

of resources embodying economic benefits or the

amount of such obligation cannot be measured

reliably. When there is a possible obligation or a

present obligation in respect of which likelihood

of outflow of resources embodying economic

benefits is remote, no provision or disclosure is

made.

R. Cash flow statements

Cash flows are reported using the indirect method,

whereby profit/ (loss) before tax is adjusted for

the effects of transactions of non-cash nature

and any deferrals or accruals of past or future

cash receipts or payments. The cash flows from

operating, investing and financing activities of the

Company are segregated based on the available

information.


S. Earnings per share

Basic earnings per share is computed by dividing the

profit/ (loss) attributable to the equity shareholders

by the weighted average number of equity shares

outstanding during the year.

Diluted earnings per share is determined by

adjusting the profit or loss attributable to equity

shareholders and the weighted average number

of equity shares outstanding for the effects of all

dilutive potential equity shares.

T. Exceptional item

Significant gains/losses or expenses incurred

arising from external events that is not expected to

recur are disclosed as ‘Exceptional item’.

U. New standards and interpretations not yet adopted

Ind AS 116 – Leases

On March 30, 2019, Ministry of Corporate Affairs

has notified Ind AS 116, Leases. Ind AS 116

which will replace the existing leases Standard,

Ind AS 17 Leases, and related Interpretations. The

Standard sets out the principles for the recognition,

measurement, presentation and disclosure of

leases for both parties to a contract i.e., the lessee

and the lessor. Ind AS 116 introduces a single

lessee accounting model and requires a lessee

to recognize assets and liabilities for all leases

with a term of more than twelve months, unless

the underlying asset is of low value. Currently,

operating lease expenses are charged to the

Statement of Profit and Loss. The standard also

contains enhanced disclosure requirements for

lessees. Ind AS 116 substantially carries forward

the lessor accounting requirements in Ind AS 17.

The effective date for adoption of Ind AS 116 is

annual periods beginning on or after 1 April 2019.

The standard permits two possible methods of

transition:

• Full retrospective – Retrospectively to eachprior period presented applying Ind AS 8

Accounting Policies, Changes in Accounting

Estimates and Errors

• Modified retrospective – Retrospectively,with the cumulative effect of initially applying

the Standard recognized at the date of initial

application.

Amendment to Ind AS 12 – Income taxes:

On 30 March 2019, Ministry of Corporate Affairs issued

amendments to the guidance in Ind AS 12, ‘Income

Taxes’, in connection with accounting for dividend

distribution taxes.

The amendment clarifies that an entity shall recognise

the income tax consequences of dividends in profit or

loss, other comprehensive income or equity according

to where the entity originally recognised those past

transactions or events.

Effective date for application of this amendment is

annual period beginning on or after 1 April 2019.

Amendment to Ind AS 19 – plan amendment, curtailment or settlement:

On 30 March 2019, Ministry of Corporate Affairs issued

amendments to Ind AS 19, ‘Employee Benefits’, in

connection with accounting for plan amendments,

curtailments and settlements.

The amendments require an entity:

• touseupdatedassumptionstodeterminecurrentservice cost and net interest for the remainder of

the period after a plan amendment, curtailment or

settlement; and

• torecogniseinprofitorlossaspartofpastservicecost, or a gain or loss on settlement, any reduction

in a surplus, even if that surplus was not previously

recognised because of the impact of the asset

ceiling.

Effective date for application of this amendment is

annual period beginning on or after 1 April 2019.

The Company is evaluating the effect of the above on its

financial statements.


3. Property, plant and equipment and capital work-in-progress (` in lakhs)



Carrying amounts of:

Freehold land 295.92 295.92

Buildings 8,657.67 9,030.33

Plant and equipment 60,836.46 63,706.80

Furniture and fixtures 76.45 102.00

Vehicles 74.57 112.69

Office equipment 333.49 283.01

Lease hold improvements 227.40 265.88

TOTAL - Property, plant and equipment 70,501.96 73,796.63

Capital work-in-progress (CWIP) 843.37 419.44

TOTAL - CWIP 843.37 419.44

Cost or deemed costFreehold

landBuildings

Plant and equipment

Furniture and

fixturesVehicles

Office equipment

Leasehold improvements

Total

Balance as at April 1, 2017 297.30 9,602.78 75,056.35 202.88 234.24 310.77 342.86 86,047.18

Additions - 561.50 2,010.27 8.61 9.42 226.10 - 2,815.90

Disposals / adjustments* - (39.62) (436.54) (0.18) (19.29) (15.90) - (511.53)

Reclassified as held for sale (1.38) (118.60) (1,736.46) (0.37) - (0.39) - (1,857.20)

Balance as at March 31, 2018 295.92 10,006.06 74,893.62 210.94 224.37 520.58 342.86 86,494.35

Additions - 122.73 3,177.46 8.15 - 226.99 - 3,535.33

Disposals / adjustments* - - (214.19) (1.00) (1.18) (5.10) - (221.47)

Reclassified as held for sale - - - - (2.99) - - (2.99)

Balance as at March 31, 2019 295.92 10,128.79 77,856.89 218.09 220.20 742.47 342.86 89,805.22

* Adjustments includes transfers inter-se

Accumulated depreciationFreehold

landBuildings

Plant and equipment

Furniture and

fixturesVehicles

Office equipment

Leasehold improvements

Total

Balance as at April 1, 2017 - 484.38 5,999.68 63.19 65.62 121.36 38.49 6,772.72

Depreciation expense - 538.87 5,597.81 45.97 53.13 121.29 38.49 6,395.56

Eliminated on disposal of assets - (23.66) (115.63) (0.05) (7.07) (5.08) - (151.49)

Eliminated on reclassification

as held for sale- (23.86) (295.04) (0.17) - - - (319.07)

Balance as at March 31, 2018 - 975.73 11,186.82 108.94 111.68 237.57 76.98 12,697.72

Depreciation expense - 495.39 5,881.44 33.18 36.52 171.78 38.48 6,656.79

Eliminated on disposal of

assets- - (47.83) (0.48) (0.64) (0.37) - (49.32)

Eliminated on reclassification

as held for sale- - - - (1.93) - - (1.93)

Balance as at March 31, 2019 - 1,471.12 17,020.43 141.64 145.63 408.98 115.46 19,303.26

NOTES FORMING PART OF THE FINANCIAL STATEMENTS


4. Intangible assets (` in lakhs)



Carrying amounts of:

Acquired computer software 242.95 369.36

TOTAL 242.95 369.36

Cost or deemed costAcquired computer

softwareTotal

Balance as at April 1, 2017 782.49 782.49

Additions 1.12 1.12

Balance as at March 31, 2018 783.61 783.61

Additions 3.44 3.44


Accumulated amortisationAcquired computer

softwareTotal

Balance as at April 1, 2017 228.47 228.47

Amortisation expense 185.78 185.78


Amortisation expense 129.85 129.85


5. Investments (` in lakhs)



Non-current Number Amount Number Amount

Trade

Unquoted Investments (all fully paid)

(a) Investment in subsidiary at cost

- IP India Foundation 50,000 5.00 50,000 5.00

Total (A) 50,000 5.00 50,000 5.00

(b) Investments in Equity Instruments at FVTOCI:

- Andhra Pradesh Gas Power Corporation Limited, equity shares

of ` 10 each1,340,000 1,553.00 1,340,000 1,459.50

- Somar Granites Private Limited, equity shares of ` 10 each 30,000 3.00 30,000 3.00

- Kedia Distillery Limited, equity shares of ` 10 each 212,800 61.71 212,800 61.71

Total (B) 1,582,800 1,617.71 1,582,800 1,524.21

Gross aggregate unquoted investments (C) = (A) + (B) 1,622.71 1,529.21

Amount of impairment in value of investments:

- Somar Granites Private Limited, equity shares of ` 10 each 3.00 3.00

- Kedia Distillery Limited, equity shares of ` 10 each 61.71 61.71

Gross amount of impairment in value of investments (D) 64.71 64.71

Aggregate carrying value of unquoted investments (C) - (D) 1,558.00 1,464.50


6. Loans (` in lakhs)



Non-current

Loans

Considered good - Secured - -

Considered good - Unsecured 14.14 21.51

Which have significant increase in Credit risk and - -

Credit impaired - -

TOTAL 14.14 21.51

Current

Loans

Considered good - Secured - -

Considered good - Unsecured (Refer Notes below) 2,121.19 137.31

Which have significant increase in Credit risk and - -

Credit impaired - -

TOTAL 2,121.19 137.31

Notes:

(i) Loans considered good - Unsecured includes Inter-Corporate Deposit (ICD) placed by the Company with Citicorp Finance

(India) Limited. Maximum amount outstanding during the year was ` 3,000 lakhs and amount outstanding as at March 31,

2019 is ` 2,000 lakhs at the interest rate of 7.15% per annum, which is maturing on April 15, 2019.

(ii) In respect of the above ICD given, the Management has concluded, based on a legal opinion obtained by it, that the

provisions of Section 186 of the Companies Act, 2013 have been complied with.

7. Other financial assets (` in lakhs)



Non-Current

a) Security Deposits

- Unsecured, considered good 964.59 990.09

TOTAL 964.59 990.09

Current

a) Security Deposits

- Unsecured, considered good 52.35 48.95

b) Advances to employees 7.51 8.60

c) Receivable from related parties - 24.38

d) Others

- Interest accrued on margin money deposits with banks 4.40 26.66

- Interest accrued on fixed deposits, ICD 61.35 -

- Interest accrued on others 20.48 -

TOTAL 146.09 108.59


8. Other assets (` in lakhs)



Non-Current

a) Capital advances 483.94 35.83

b) Prepaid expenses 55.03 54.67

c) Balances with statutory / government authorities 3,179.01 2,798.10

TOTAL 3,717.98 2,888.60

Current

a) Advances recoverable in cash or in kind

Considered good 4,360.03 2,695.56

Considered doubtful 37.08 37.08

4,397.11 2,732.64

Less: Provision for other doubtful loans and advances 37.08 37.08

4,360.03 2,695.56

b) Prepaid expenses 221.84 401.79

c) Balances with statutory / government authorities 2,182.66 190.15

d) Others

- Export benefits receivable 588.98 502.95

TOTAL 7,353.51 3,790.45

9. Inventories (` in lakhs)



(at lower of cost and net realisable value)

(a) Raw materials 4,859.51 5,559.63

Add : Goods in Transit 29.97 95.62

(b) Work-in-progress 1,226.28 961.28

(c) Finished goods 1,275.01 1,420.51

(d) Stores and spares (includes fuel) 8,035.44 7,115.82

Add : Goods in Transit 273.45 325.03

TOTAL 15,699.66 15,477.89

Notes:

(i) The cost of inventories recognised as an expense during the year has been disclosed on the face of the Statement of

Profit and Loss.

(ii) There are no inventories expected to be recovered after more than twelve months.

10. Trade receivables (` in lakhs)



Trade receivables

(a) Considered good - Secured 2,737.00 3,671.65

(b) Considered good - Unsecured 4,618.73 3,285.84

(c) Which have significant increase in Credit risk and - -

(d) Credit impaired 89.39 126.10

Less: Impairment loss on trade receivables 89.39 126.10

TOTAL 7,355.73 6,957.49

Notes:

(i) The average credit period on sale is 17 days. No interest is charged on trade receivables for the first 30 days from the

date of the invoice. Thereafter, interest is charged at 15% per annum on the outstanding balance.

(ii) Before accepting any new customer, the Company has a credit evaluating system to assess the potential customer's

credit quality and defines credit limits by customer. Limits and scoring attributed to customers are reviewed twice a

year. Of the trade receivables balance, ` 392.29 lakhs (as at March 31, 2018: ` 852.10 lakhs) is due from customers

who represent more than 5% of the total balance of trade receivables.


(iii) The Company maintains an allowance of doubtful accounts based on financial condition of the customer, ageing

of customer receivable and overdues, available collaterals and historical experience of collections from customers.

Accordingly, the Company creates provision towards doubtful receivables after recovering the underlying collaterals.

Besides, the Company has used a practical expedient by computing the expected credit loss allowance for trade

receivables based on a historical loss rate method. The historical loss rate takes into account historical credit loss

experience and adjusted for forward-looking information. The expected credit loss allowance is based on the average

loss rate of the collections against the receivables.

Movement in the Impairment loss on trade receivables (` in lakhs)

ParticularsAs at

March 31, 2019As at

March 31, 2018

Balance at beginning of the year 126.10 115.92

Movement in the Impairment loss on trade receivables (Net) (36.71) 10.18

Balance at end of the year 89.39 126.10

The Concentration of credit risk is limited to the fact that the customer base is large and unrelated.

11. Cash and cash equivalents (` in lakhs)



a) Cash on hand 1.06 0.86

b) Balances with Banks

- in Current accounts 707.21 1,093.27

- in EEFC accounts 156.73 406.92

- in demand deposit accounts with original maturity of less than

3 months600.01 100.00

TOTAL 1,465.01 1,601.05

12. Other bank balances (` in lakhs)



In other deposit accounts

- Term deposits with original maturity of more than 3 months

but less than 12 months5,000.00 -

In earmarked accounts:

(a) Balances held as margin money or security against guarantees

and other commitments241.02 63.07

(b) Unpaid dividend accounts - 1.47

TOTAL 5,241.02 64.54

13. Non-current tax assets (net) (` in lakhs)



Tax assets

Advance Tax (including TDS receivable) 12,716.22 7,324.80

Tax liabilities

Income tax payable 11,964.28 6,404.68

TOTAL 751.94 920.12


14. Assets classified as held for sale (` in lakhs)



Fixed assets held for sale - (Also refer Note 54 (b)) 632.44 656.38

TOTAL 632.44 656.38

15. Equity share capital (` in lakhs)



Equity share capital 3,977.00 3,977.00

3,977.00 3,977.00

Authorised Share capital :

40,000,000 fully paid up equity shares of ` 10 each 4,000.00 4,000.00

500,000 Redeemable cumulative preference shares of ` 100 each 500.00 500.00

Issued and subscribed capital comprises:

39,770,039 fully paid up equity shares of ` 10 each

(as at March 31, 2018: 39,770,039)3,977.00 3,977.00

3,977.00 3,977.00

15.1 Reconciliation of the number of shares and amount outstanding at the beginning and at the end of the year:

Number of sharesShare capital

(Amount)

Balance at April 01, 2017 39,770,039 3,977

Changes during the year - -

Balance at March 31, 2018 39,770,039 3,977

Changes during the year - -

Balance at March 31, 2019 39,770,039 3,977

15.2 Rights, preferences and restrictions attached to the equity shares

The Company has only one class of issued, subscribed and fully paid up equity shares having a face value of ` 10 each per

share. Each holder of equity shares is entitled to one vote per share. The dividend (other than interim dividend) proposed, if

any, by the Board of Directors is subject to the approval of the Shareholders in the ensuing Annual General Meeting. In the

event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company,

after distribution of all preferential amounts. The distribution will be in proportion to number of equity shares held by the

shareholders.

15.3 Equity shares held by the holding company

Name of the ShareholderAs at

March 31, 2019As at

March 31, 2018

International Paper Investments (Luxembourg) S.a.r.l # 21,856,033 21,856,033

# The ultimate holding company is International Paper Company, USA.

15.4 Details of shares held by each shareholder holding more than 5% of the aggregate shares in the Company

Name of the Shareholder



Number of Shares

% holding

of equity shares

Number of Shares

% holding

of equity shares

International Paper Investments (Luxembourg) S.a.r.l # 21,856,033 54.96 21,856,033 54.96

IP International Holdings Inc. # 7,971,496 20.04 7,971,496 20.04

# The ultimate holding company is International Paper Company, USA.


16. Other equity (` in lakhs)



General reserve - 28,876.29

Securities premium 18,211.13 18,211.13

Reserve for equity instruments through other comprehensive income 11.05 (60.67)

Retained earnings 53,583.43 4,798.78

Capital redemption reserve 598.00 598.00

TOTAL 72,403.61 52,423.53

16.1 General reserve (` in lakhs)

ParticularsAs at

March 31, 2019As at

March 31, 2018

Balance at beginning of year 28,876.29 28,876.29

Movements during the year (Refer Note 50) (28,876.29) -

Balance at end of year - 28,876.29

The general reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the

general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive

income, items included in the general reserve will not be reclassified subsequently to profit or loss.

16.2 Securities premium (` in lakhs)

ParticularsAs at

March 31, 2019As at

March 31, 2018

Balance at beginning of year 18,211.13 18,211.13

Movements during the year - -

Balance at end of year 18,211.13 18,211.13

Security premium reserve represents the amount received in excess of the face value of the equity shares. The utilisation of

the security premium reserve is governed by the Section 52 of the Companies Act, 2013 ("Act").

16.3 Reserve for equity instruments through other comprehensive income (` in lakhs)

ParticularsAs at

March 31, 2019As at

March 31, 2018

Balance at beginning of year (60.67) (409.43)

Net fair value gain on investments in equity instruments at FVTOCI 93.50 453.36

Income tax on net fair value gain on investments in equity instruments at

FVTOCI(21.78) (104.60)

Balance at end of year 11.05 (60.67)

This reserve represents the cumulative gains and losses arising on the revaluation of equity instruments measured at fair

value through other comprehensive income.

16.4 Retained earnings (` in lakhs)

ParticularsAs at

March 31, 2019As at

March 31, 2018

Balance at beginning of year 4,798.78 (3,458.15)

Transfer from general reserve as per Scheme of Arrangement

(Refer Note 50)28,876.29 -

Profit for the year 20,007.66 8,306.71

Remeasurement of defined benefit plan (152.63) (76.11)

Related income tax 53.33 26.33

Balance at end of year 53,583.43 4,798.78

Retained earnings represent the Company's undistributed earnings after taxes.


16.5 Capital redemption reserve (` in lakhs)

ParticularsAs at

March 31, 2019As at

March 31, 2018

Balance at beginning of year 598.00 598.00

Movements during the year - -

Balance at end of year 598.00 598.00

Capital redemption reserve has been created pursuant to the requirements of the Act under which the Company is required

to transfer certain amounts on redemption of preference shares. The Company has redeemed the underlying preference

shares in the earlier years. The capital redemption reserve can be utilised for issue of bonus shares.

17. Borrowings (` in lakhs)



Non-current

Unsecured – at amortised cost

(i) Term loans (Refer Note (i) below)

- from Banks - 5,000.00

(ii) Deferred payment liabilities (Refer Note (ii) below) 1,254.08 1,479.58

TOTAL 1,254.08 6,479.58

Notes:

(i) Term loans

During the year, the Company has availed unsecured term loans from banks aggregating to ` Nil lakhs (March 31, 2018

- ` 5,000.00 lakhs) outstanding at the year end ` Nil lakhs (March 31, 2018 - ` 7,500.00 lakhs) (Refer Note 20 for current

maturities). Letter of Comfort has been provided to the banks by International Paper Company, USA, the ultimate

holding company. The interest rates of these loans range from 7.55% to 8.00%. These term loans are repayable as

under:

a. Term Loan I: ` 15,000.00 lakhs which was payable in 6 equal quarterly installments commenced at the end of

21st month i.e. September 2017. The Company has pre-paid the last installment in June 2018.

b. Term Loan II: ` 7,000.00 lakhs which was payable after completing moratorium of 18 months and in 10 equal

quarterly installments commenced at the end of 21st month i.e. September 2017 was fully repaid in December 2017.

c. Term Loan III: ` 5,000.00 lakhs which was payable after completing moratorium of 18 months and is repayable in

6 equal installments commencing at the end of 21st month i.e. November 2019 was fully repaid in October 2018.

(ii) Deferred payment liabilities

Deferred payment liabilities represent sales tax deferral loan availed by the Company, from the Government of Andhra

Pradesh and is repayable after a period of 14 years from the end of the financial year of its availment. These are interest

free loans. An amount of ` 225.50 lakhs (March 31, 2018 – ` 172.28 lakhs) is due within next twelve months and is

included under the head ‘Current maturities of long-term debts’ disclosed under Note 20.

18. Borrowings (` in lakhs)



Current

Secured – at amortised cost

(a) Loans repayable on demand

- from banks - Refer Note (i) below - 2,000.00

Unsecured – at amortised cost

a) Loans repayable on demand

- from banks - Refer Note (ii) below - 2,000.00

b) Loans from related parties - Refer Note (iii) below - 7,600.00

TOTAL - 11,600.00

Notes:

(i) Secured loans was availed and repayable on demand represents Cash credit/Buyers credit/ Export packing credit loan

from SBI, BNP Paribas during the year at interest rates ranging from 4.50% to 8.90%. These are secured by hypothecation

of current assets of the Company.


(ii) Unsecured loans were availed and repayable on demand represents Working capital demand loans/Cash credit /Export

packing credit loan/Buyers credit from Bank of America, Citi bank, BNP Paribas during the year at interest rates ranging

from 4.11% to 8.70%.

(iii) Unsecured loan availed from International Paper (India) Private Limited at interest rate of 6.70% aggregating ̀ 7,600 lakhs

during the previous year which was outstanding as on March 31, 2018, was fully paid during the current year.

19. Trade payables (` in lakhs)



(i) Total outstanding dues of micro enterprises and small enterprises

(Refer Note 40)474.40 83.21

(ii) Total outstanding dues of creditors other than micro enterprises and

small enterprises16,614.19 13,147.79

TOTAL 17,088.59 13,231.00

20. Other financial liabilities (` in lakhs)



Non-current

- Finance lease obligations 478.37 691.31

TOTAL 478.37 691.31

Current

a) Current maturities of long-term debt 225.50 2,672.28

b) Current maturities of finance lease obligations 212.95 197.17

c) Interest accrued 15.53 21.22

d) Unclaimed dividends - 1.47

e) Others :-

(i) Trade / security deposits received 2,434.30 2,361.91

(ii) Payables on purchase of fixed assets 359.78 579.98

(iii) Contractually reimbursable expenses 57.04 79.75

(iv) Dues to Ultimate holding company towards Performance

Share Plan143.78 -

TOTAL 3,448.88 5,913.78

21. Provisions (` in lakhs)



Non-Current

Employee benefits: (Refer Note 33)

- Compensated absences 28.06 147.10

- Gratuity 143.60 207.79

TOTAL 171.66 354.89

Current

Provisions:

For contingencies (Refer Note 41) 1,090.66 1,090.66

For others (Disputed dues) (Refer Note 53) 2,357.43 2,357.43

TOTAL 3,448.09 3,448.09


22. Other current liabilities (` in lakhs)



a) Advances from customers 313.63 306.82

b) Other Payables

- Statutory remittances 361.99 419.82

- Others* 1,702.66 1,083.82

TOTAL 2,378.28 1,810.46

* Others include liabilities created on account of demands received in respect of excise, property tax, water cess etc.

23. Deferred tax liabilities (net) (` in lakhs)



Deferred tax liabilities (net) 13,961.02 14,197.09

MAT credit entitlement - (4,462.78)

Deferred tax liabilities (net) 13,961.02 9,734.31

2018-2019Opening balance

Recognised in profit or

loss

Recognised in other


MAT Credit

utilization

Closing balance

Deferred tax (liabilities) / assets in relation to:

Property, plant and equipment (15,024.32) 314.99 - - (14,709.33)

Disallowances under Income Tax Act,

1961, allowed on payment basis574.83 (94.25) - - 480.58

Longterm capital loss carried forward 22.53 0.22 - - 22.75

Financial assets at FVTOCI 18.20 - (21.78) - (3.58)

Provision for doubtful debts 56.48 (12.28) - - 44.20

Remeasurement of defined benefit plans 81.16 - 53.33 - 134.49

Others 74.03 (4.16) - - 69.87

MAT Credit 4,462.78 - - (4,462.78) -

Total (9,734.31) 204.52 31.55 (4,462.78) (13,961.02)

2017-2018Opening balance

Recognised in profit or

loss

Recognised in other


MAT Credit

utilization

Closing balance

Deferred tax (liabilities) /assets in relation to:

Property, plant and equipment (15,946.36) 922.04 - - (15,024.32)

Disallowances under Income Tax Act,

1961, allowed on payment basis608.77 (33.94) - - 574.83

Unabsorbed depreciation carried forward 1,923.01 (1,923.01) - - -

Longterm capital loss carried forward 22.53 - - - 22.53

Financial assets at FVTOCI 122.80 - (104.60) - 18.20

Provision for doubtful debts 58.85 (2.37) - - 56.48

Remeasurement of defined benefit plans 54.82 - 26.34 - 81.16

Others 74.82 (0.79) - - 74.03

MAT Credit 5,083.39 (21.57) - (599.04) 4,462.78

Total (7,997.37) (1,059.64) (78.26) (599.04) (9,734.31)


24. Revenue from operations (` in lakhs)

Year ended March 31, 2019


(a) Sale of products - (Refer Note (i) below and Note 52) 140,950.37 125,981.91

(b) Other operating revenues - (Refer Note (ii) below) 1,782.95 1,998.31

TOTAL 142,733.32 127,980.22

Notes:

(i) Sale of products comprise of sale of paper and paperboard

(ii) Other operating revenues comprise:

Sale of saplings 60.36 65.31

Duty draw back on exports 938.68 911.73

Incidental charges recovered from customers 87.33 461.09

Sale of scrap 696.58 560.18

TOTAL 1,782.95 1,998.31

25. Other income (` in lakhs)



a) Interest income earned on financial assets that are not designated

as fair value through profit or loss6.51 6.06

b) Interest income 297.39 236.13

c) Gain on disposal of property, plant and equipment (net) - -

d) Insurance and other claims 3.03 56.16

e) Liabilities / provisions no longer required written back 630.34 20.00

f) Exchange differences (net) 133.53 -

g) Miscellaneous Income 388.04 211.05

TOTAL 1,458.84 529.40

26. Changes in inventories of finished goods and work-in-progress (` in lakhs)



Inventories at the beginning of the year

- Work-in-progress 961.28 1,651.71

- Finished goods 1,420.51 2,444.68

2,381.79 4,096.39

Inventories at the end of the year

- Work-in-progress 1,226.28 961.28

- Finished goods 1,275.01 1,420.51

2,501.29 2,381.79

Changes in Inventories (119.50) 1,714.60

Duties on increase / (decrease) of finished goods - (63.94)

(119.50) 1,650.66

27. Employee benefits expense (` in lakhs)



Salaries and wages 13,087.11 13,057.08

Contribution to provident and other funds 811.17 806.69

Performance share plan expense (Refer Note 51) 239.72 89.18

Cost of deputed personnel 157.29 112.32

Staff welfare expenses 972.73 1,154.90

TOTAL 15,268.02 15,220.17


28. Finance costs (` in lakhs)



Interest on bank overdrafts and loans (other than those from related

parties)349.40 1,860.49

Interest on loans from related parties 159.63 175.61

Other interest expense 278.72 510.78

Bank and finance charges 66.36 62.11

TOTAL 854.11 2,608.99

29. Depreciation and amortisation expense (` in lakhs)



Depreciation of property, plant and equipment (Refer Note 3) 6,656.79 6,395.56

Amortisation of intangible assets (Refer Note 4) 129.85 185.78

TOTAL 6,786.64 6,581.34

30. Other expenses (` in lakhs)



Consumption of stores, spares and chemicals 18,973.00 17,213.89

Power, fuel and water 8,827.33 9,370.08

Repairs and maintenance

- Buildings 887.41 843.39

- Plant and machinery 2,026.92 3,825.60

- Others 352.62 247.72

Operating Service expenses 3,859.99 -

Conversion / processing charges 284.06 382.87

Forwarding, transportation and other sales expenses 1,319.11 2,213.43

Rates and taxes 329.57 469.62

Royalty 502.75 427.94

Rent 445.93 474.48

Insurance 408.11 464.42

Legal and professional charges 583.85 1,024.24

Provision for doubtful trade receivables and advances 3.19 11.75

Bad trade receivables and advances written-off - 0.29

Exchange differences (net) - 39.82

Payment to auditors (Refer Note 39) 74.70 72.38

Loss on sale / scrap of property, plant and equipment's (net) 174.46 420.09

Miscellaneous Expenses 2,701.13 1,645.97

TOTAL 41,754.13 39,147.98


31. Tax Expense

A. Amounts recognised in profit or loss

i) Income tax recognised in the Statement of profit or loss (` in lakhs)

ParticularsYear ended


March 31, 2018

Current Tax 11,330.03 3,279.32

Deferred tax (204.52) 1,059.64

Total income tax expense recognised 11,125.51 4,338.96

ii) Income tax recognised in other comprehensive income



March 31, 2018

Deferred tax related to items recognised in OCI

Deferred tax benefit on fair value gain on investments in equity

instruments through OCI(21.78) (104.60)

Deferred tax expense on remeasurements of defined benefit plans 53.33 26.34

Income tax income / (expense) recognised in OCI 31.55 (78.26)

B. The income tax expense for the year can be reconciled to the accounting profit as follows:



March 31, 2018

Profit before tax (A) 31,133.17 12,645.67

Enacted tax rate (B) 34.94% 34.61%

Expected Tax Expenses (C=A * B) 10,879.17 4,376.41

Adjustments

Effect of change in tax rate 137.84 -

Prior year taxation 47.80 -

Effect of expenses that are not deductible in determining taxable profit 158.17 -

Setoff of unabsorbed depreciation of earlier years (206.14) -

Tax effects of other adjustments 108.67 (37.45)

Total Adjustments - D 246.34 (37.45)

Tax expense recognised in profit or loss (E=C+D) 11,125.51 4,338.96

32. Contingent Liabilities and Commitments

A. Contingent Liabilities (to the extent not provided for): (` in lakhs)

ParticularsAs at

March 31, 2019As at

March 31, 2018

Claims against the Company not acknowledged as debt:

- Matters under litigation

a. Income tax matters 640.67 640.67

b. Excise duty claims disputed by the Company relating to issues

of applicability, classification and valuation4,040.43 5,642.97

c. Sales tax claims disputed by the Company relating to issues of

applicability, royalty and discounts570.08 556.17

d. Electricity duty towards consumption of energy generated by

captive power unit (refer Note 53)1,571.62 1,571.62

e. Other matters (third party claims, interest on royalty,

ex-employees claims etc.,)2,066.05 2,066.05

The amounts disclosed above represent best estimates and the uncertainties are dependent on the outcome of the legal

processes initiated by the Company or the claimant as the case may be.


B. Commitments: (` in lakhs)

Particulars As at

March 31, 2019As at

March 31, 2018

i) Estimated amount of contracts remaining to be executed on capital

account and not provided for (net of advances)1,509.78 2,080.38

33. Employee Benefits

A. Defined contribution plans :

Provident fund:

The Company contributed ` 415.34 lakhs (Previous year: ` 402.95 lakhs) to the Provident Fund Trust maintained by the

Company and ` 112.50 lakhs (Previous year: ` 122.48 lakhs) to Regional Provident Fund Commissioner, which was recognized

as an expense in Statement of Profit and Loss during the year.

Superannuation:

The Company recognized ` 23.04 lakhs (Previous year: ` 28.95 lakhs) as an expense towards contribution as superannuation

in the Statement of Profit and Loss during the year.

B. Defined benefit plans

Amounts recognised in statement of profit and loss in respect of these defined benefit i.e. Gratuity plans are as follows: (` in lakhs)



Current service cost 181.51 168.33

Net interest expense 13.68 1.96

Components of defined benefit costs recognised in statement of profit or loss

195.19 170.29

Re-measurement on the net defined benefit liability:

- Return on plan assets (greater)/less than discount rate (44.01) (60.41)

- Actuarial (gains) / losses arising from experience adjustments 154.14 6.19

- Actuarial (gains) / losses arising from changes in financial

assumptions 42.50 130.33

Components of defined benefit costs recognised in other comprehensive income

152.63 76.11

Total 347.82 246.40

The current service cost and the net interest expense for the year are included in the ‘Employee benefits expense’ line item

in the Statement of profit and loss.

The re-measurement of the net defined benefit liability is included in other comprehensive income.

The amount included in the balance sheet arising from the entity’s obligation in respect of its defined benefit plans is as follows: (` in lakhs)

ParticularsAs at

March 31, 2019As at

March 31, 2018

Present value of defined benefit obligation 2,767.13 2,498.49

Fair value of plan assets 2,623.53 2,290.70

Net liability arising from defined benefit obligation (143.60) (207.79)

Movements in the present value of the defined benefit obligation are as follows: (` in lakhs)



March 31, 2018

Opening defined benefit obligation 2,498.49 2,410.85

Current service cost 181.51 168.33

Interest cost 180.14 160.00

Actuarial (gains) / losses arising from experience adjustments 154.14 6.19

Actuarial (gains) /losses arising from changes in financial assumptions 42.50 130.33

Benefits paid (289.65) (377.21)

Closing defined benefit obligation 2,767.13 2,498.49


Movements in the fair value of the plan assets are as follows: (` in lakhs)



March 31, 2018

Opening fair value of plan assets 2,290.70 2,317.92

Interest income 166.47 158.04

Contributions from the employer 412.00 131.54

Return on plan assets (greater)/less than discount rate 44.01 60.41

Benefits paid (289.65) (377.21)

Closing fair value of plan assets 2,623.53 2,290.70

Composition of plan assets:

ParticularsAs at

March 31, 2019As at

March 31, 2018

Insurer managed funds 100.00% 100.00%

100.00% 100.00%

The principal assumptions used for the purposes of the actuarial valuations were as follows:

Particulars March 31, 2019 March 31, 2018

Discount rate 7.65% 7.70%

Estimated rate of return on plan assets 7.50% 7.50%

Salary escalation rate 7.00%

Sr.staff - 7.00%

Jr. staff & Workers

6.00%

Mortality rate

Indian Assured

Lives Mortality

(IALM) (2012-14) Ult.

Modified

Indian Assured

Lives Mortality

(IALM) (2006-08) Ult.

Modified

Attrition rate

Age Rate p.a Age Rate p.a

21-30

31-40

41 &

Above

5%

3%

2%

21-30

31-40

41 &

Above

5%

3%

2%

Significant actuarial assumptions for the determination of the defined obligation are discount rate, expected salary increase

and mortality. The sensitivity analyses below have been determined based on reasonably possible changes of the respective

assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

(` in lakhs)

Gratuity plan

March 31, 2019 March 31, 2018

Sensitivity Analysis – DBO at the end of the year

Discount rate + 100 basis points (191.44) (149.55)

Discount rate – 100 basis points 220.44 171.53

Salary rate + 1% 219.68 171.44

Salary rate – 1% (194.22) (152.13)

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation

as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be

correlated.

Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated

using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the

defined benefit obligation liability recognised in the balance sheet.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

There has been no change in the process used by the Company to manage its risks from prior periods.


Gratuity plan

March 31, 2019 March 31, 2018

Weighted average duration of DBO 8 years 8 years

Expected cash flows

1. Expected employer contribution in the next year 150.00 60.38

2. Expected benefit payments

Year 1 335.99 317.58

Year 2 340.19 288.33

Year 3 405.59 382.18

Year 4 350.24 329.41

Year 5 267.97 284.80

Beyond 5 years 1,082.45 1,529.47

34. Segment reporting

Operating Segments

The Chairman & Managing Director of the Company has been identified as the Chief Operating Decision Maker (CODM)

who evaluates the Company’s performance and allocates resources for manufacture and sale of pulp, paper and paperboard.

Accordingly, manufacturing and sale of pulp, paper and paperboard is considered as the single operating segment of the

Company.

Geographical Information

The Company operates in India and makes certain sales to customers situated outside of India. The revenue from external

customers by location of customers is detailed below. All the non-current assets of the Company are situated within India.

(` in lakhs)

Revenue – Sale of productsYear ended


March 31, 2018

India 1,18,960.48 1,03,021.65

Outside India 21,989.89 22,960.26

Total 1,40,950.37 1,25,981.91

35. Related party disclosures

a. List of related parties and relationships

(i) Ultimate Holding Company

International Paper Company, USA

(ii) Holding Company

International Paper Investments (Luxembourg) S.a.r.l

(iii) Subsidiary Company

IP India Foundation

(iv) Fellow Subsidiaries

International Paper (India) Private Limited

(v) Entity where the Company is in a position to exercise control

The Employees Provident Fund of The Andhra Pradesh Paper Mills Limited

(vi) Key Management Personnel

- Mr. Donald Paul Devlin – Chairman & Managing Director (with effect from April 28, 2017)

- Mr. Rampraveen Swaminathan – Chairman & Managing Director (till April 27, 2017)


b. Transactions during the year (` in lakhs)

Particulars Name of the related partyYear ended


March 31, 2018

Professional charges –

Income

International Paper (India) Private

Limited318.17 163.11

Professional charges -

Management contracts

International Paper (India) Private

Limited168.05 123.00

Royalty expenses International Paper Company, USA 450.92 427.94

Loan receivedInternational Paper (India) Private

Limited- 8,600.00

Loan repaidInternational Paper (India) Private

Limited7,600.00 1,000.00

Foreign currency loan paidInternational Paper Investments

(Luxembourg) S.à r.l.- 2,596.50

Interest paid on foreign

currency loan

International Paper Investments

(Luxembourg) S.à r.l.- 41.26

Interest paid on loanInternational Paper (India) Private

Limited159.63 134.35

Expenses to be reimbursed

- Performance Share PlanInternational Paper Company, USA 239.72 89.18

Contribution towards

provident fund

The Employees Provident Fund of The

Andhra Pradesh Paper Mills Limited415.34 402.95

Contribution towards CSR

expensesIP India Foundation 13.83 9.10

c. Amounts due from / due to related parties (` in lakhs)

Particulars Name of the related partyAs at

March 31, 2019As at

March 31, 2018

Due to related parties

Loan payable International Paper (India) Private Limited - 7,600.00

Trade payables International Paper (India) Private Limited 2.97 41.77

International Paper Company, USA 104.85 190.73

Payable towards

performance share planInternational Paper Company, USA 333.52 167.78

Due from related parties

Other Receivables International Paper (India) Private Limited - 24.38

Notes:

In respect of certain borrowings (refer Note 17), Letter of Comfort has been provided to the banks by International Paper

Company, USA, the ultimate holding company.

36. Obligations under finance leases (` in lakhs)

Particulars

Minimum lease payments

Present value of minimum lease

payments

As at March 31,

2019

As at March

31, 2018

As at March

31, 2019

As at March

31, 2018

Not later than one year 268.25 268.25 248.38 248.37

Later than one year and not later than five years 536.51 804.75 442.84 640.11

Later than five years - - - -

804.76 1,073.00 691.32 888.48

Less: Future finance charges (113.44) (184.52) - -

Present value of minimum lease payments 691.32 888.48 691.32 888.48


(` in lakhs)

Included in the financial statements asAs at

March 31, 2019As at

March 31, 2018

- Current Finance Lease obligations (Refer Note 20) 212.95 197.17

- Non-Current Finance Lease obligations (Refer Note 20) 478.37 691.31

Total 691.32 888.48

37. Operating lease arrangements

The Company’s significant leasing arrangements are in respect of operating leases for premises (Offices, go-downs etc.)

ranging from 3 years to 20 years. The aggregate lease rentals payable are charged as “Rent” under Note 30 - Other expenses.

With regard to the non-cancellable operating lease, the future minimum lease rentals are as follows: (` in lakhs)

Particulars As at

March 31, 2019As at

March 31, 2018

Not later than one year 40.73 37.60

Later than one year and not later than five years 169.19 166.06

Later than five years 285.12 328.98

38. Earnings per share

The calculations of profit attributable to equity shareholders and weighted average number of equity shares outstanding for

purposes of basic earnings per share calculation are as follows:



March 31, 2018

Profit for the year (In ` Lakhs) 20,007.66 8,306.71

Weighted average number of equity shares outstanding during the year

(Nos.) - Basic and Diluted39,770,039 39,770,039

Earnings per share (Face value ` 10 per share) Basic and Diluted (`) 50.31 20.89

39. Payments to Auditors (` in lakhs)



March 31, 2018

Statutory audit fees 52.00 50.00

Limited Review fees 12.00 12.00

Tax audit fees 8.00 8.00

Certification fees 1.50 1.50

Out of pocket expenses and others 1.20 0.88

TOTAL 74.70 72.38

The above excludes ` 4 lakhs (Previous year - ` 4 lakhs) paid to the affiliate firm of auditors


40. Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006

The amount due to Micro and Small Enterprises as defined in the ‘The Micro, Small and Medium Enterprises Development

Act, 2006’ has been determined to the extent such parties have been identified on the basis of information available with the

Company. The disclosures relating to Micro, Small and Medium Enterprises are as under:

(` in lakhs)

ParticularsAs at

March 31, 2019As at

March 31, 2018

(i) Principal amount remaining unpaid to supplier at the end of the year 474.40 83.21

(ii) Interest due thereon remaining unpaid to supplier at the end of the year 15.53 7.48

(iii) The amount of interest paid along with the amounts of the payment

made to supplier beyond the appointed day- -

(iv) The amount of interest due and payable - -

(v) The amount of interest accrued and remaining unpaid at the end of

accounting year 15.53 7.48

41. Provision for contingencies

The Company carries a general provision for contingencies towards various disputed matters / claims made against the Company

based on the Management’s assessment. Also, refer Note 21. The movement of this provision account is as under:

(` in lakhs)

ParticularsAs at

March 31, 2019As at March

31, 2018

Opening balance 1,090.66 1,090.66

Provision made during the year - -

Amounts utilized / reversed during the year - -

Closing balance 1,090.66 1,090.66

42. Category-wise classification of Financial Instruments

The carrying value of financial instruments by categories as at March 31, 2019 and March 31, 2018 is as follows:

(` in lakhs)

Particulars Fair value hierarchyCarrying Value #

As at March 31, 2019 As at March 31, 2018

FINANCIAL ASSETS

Measured at amortised cost

(i) Cash and cash equivalents Level 2 1,465.01 1,601.05

(ii) Other bank balances Level 2 5,241.02 64.54

(iii) Trade receivables Level 2 7,355.73 6,957.49

(iv) Loans * Level 2 2,135.33 158.82

(v) Investments Level 2 5.00 5.00

(vi) Other financial assets** Level 2 1,110.68 1,098.68

Measured at FVTOCI

Investments in equity instruments Level 3 1,553.00 1,459.50

TOTAL FINANCIAL ASSETS 18,865.77 11,345.08

FINANCIAL LIABILITIES

Measured at Amortised cost

(i) Borrowings (including current maturities of

long term debt)Level 2 1,479.58 20,751.86

(ii) Trade payables Level 2 17,088.59 13,231.00

(iii) Other financial liabilities *** Level 2 3,701.75 3,932.81

TOTAL FINANCIAL LIABILITIES 22,269.92 37,915.67

# Also represents fair value

* Loans include loans given to employees

** Other financial assets includes Security deposits with the vendors, advances given to employees, Receivable from related

parties and margin money deposits.

*** Other financial liabilities includes interest accrued on the long term debt, security deposits received from customers and

payables on purchase of fixed assets, excluding current maturities of long term debt.


43. Calculation of fair values

The fair values of the financial assets and liabilities are defined as the price that would be received to sell an asset or paid to

transfer a liability in an orderly transaction between market participants at the measurement date. Methods and assumptions

used to estimate the fair values are consistent with those used for the year ended March 31, 2018.

Financial assets and liabilities measured at fair value as at Balance Sheet date

The fair values of investments in unquoted equity investments has been estimated using a discounted cash flow model under

income approach. The valuation requires Management to make certain assumptions about model inputs, including forecast

cash flows, discount rate and credit risk, the probabilities of the various estimates within range can be reasonably assessed

and are used in Management’s estimate of fair value for these unquoted investments.

44. Fair value hierarchy:

The fair value of financial instruments as referred to in Note 42 above have been classified into three categories depending

on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active markets for

identified assets or liabilities (Level 1 measurements) and lowest priority to unobservable inputs (Level 3 measurements).

The categories used are as follows:

Level 1 — Quoted prices for identified instruments in an active market.

Level 2 — Directly or indirectly observable market inputs, other than Level 1 inputs; and

Level 3 — Inputs which are not based on observable market data.

This note provides information about how the Company determines fair values of various financial assets and financial

liabilities.

Fair value of the Company’s financial assets and financial liabilities that are measured at fair value on a recurring basis.

Some of the Company’s financial assets and financial liabilities are measured at the fair value at the end of each reporting

period. The following table gives information about how the fair value of these financial assets and financial liabilities are

determined (in particular, the valuation technique and other inputs used).

Financial

assets/

Financial

liabilities

Fair value as at

Fair value

hierarchy

Valuation

technique and

key input

Significant

unobservable input

Relationship of

unobservable

inputs to fair valueMarch 31, 2019 March 31, 2018

Investments

in equity

instruments

at FVTOCI

(unquoted

Note iii)

1.84% equity

investment in

Andhra Pradesh

Gas Power

Corporation

Limited

engaged in

generation and

distribution

of power and

domiciled in

India,

` 1,553.00

lakhs

1.84% equity

investment in

Andhra Pradesh

Gas Power

Corporation

Limited

engaged in

generation and

distribution

of power and

domiciled in

India,

` 1,459.50

lakhs

Level 3 Discounted

cash flow

model under

income

approach was

used to capture

the present

value of the

expected future

economic

benefits to be

derived from

the ownership

of the investee.

Long term growth

rates, taking

into account

management’s

experience and

knowledge of

market conditions

of the specific

industry at

2%. Weighted

average cost of

capital (WACC) as

determined ranging

from 17.22% (As

at March 31, 2018:

15.78%)

A slight increase in

long term revenue

growth rates used

in isolation would

result in increase in

the fair value (Refer

Note i below).

A slight increase

in the WACC used

in isolation would

result in decrease

in the fair value

(Refer Note ii

below)

Notes:

i. If the Long-term growth rates used were 1% higher / lower while all other variables were held constant, the carrying

amount of the shares would increase / (decrease) by ` 62.00 lakhs and ` (53.00) lakhs respectively [as at March 31,

2018: increase/(decrease) by ` 131.83 lakhs and ` (113.99) lakhs.].

ii. A 1% increase / (decrease) in WACC or discount rate used while holding all other variables constant would (decrease) /

increase the carrying amount of the unquoted equity investments by ` (94.00) lakhs and ` 108.00 lakhs respectively (as

at March 31, 2018: (decrease) / increase by ` (97.35) lakhs and ` 112.48 lakhs).

iii. These investments in equity instruments are not held for trading. Instead, they are held for long term strategic purpose.

Upon the application of Ind AS 109, the Company has chosen to designate these investments in equity instruments

as at FVTOCI irrevocably as the Management believes that this provides a more meaningful presentation for long term

strategic investments, than reflecting changes in fair value immediately in profit or loss.


iv. Reconciliation of Level 3 fair value measurements: (` in lakhs)

Investments in unquoted equity instruments at FVTOCIFor the year ended

March 31, 2019For the year ended

March 31, 2018

Opening balance 1,459.50 1,006.14

Total gain or losses:

- in other comprehensive income 93.50 453.36

Purchases - -

Sold - -

Closing balance 1,553.00 1,459.50

45. Financial Risk Management and Capital Management

The Company’s business activities are exposed to a variety of financials risks, namely Interest rate risk, credit risk,

liquidity risk and foreign currency risk. The Company’s senior management has the overall responsibility for establishing

and governing the Company’s risk management framework. The Company’s risk management policies are established

to identify and analyse the risks faced by the Company, periodically review the changes in market conditions and reflect

the changes in the policy accordingly. The key risks and mitigating actions are overseen by the Board of Directors of the

Company.

A. Interest rate risk

The Company is exposed to interest rate risk because Company borrow funds at both fixed and floating interest rates.

The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings.

The sensitivity analyses below have been determined based on the exposure to interest rates for the non-derivative

instruments at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of

the liability outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or

decrease is used when reporting interest rate risk internally to key management personnel and represents management’s

assessment of the reasonably possible change in interest rates.

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Company’s:

Profit for the year ended March 31, 2019 would decrease/increase by ` Nil lakhs (for the year ended March 31, 2018:

decrease/increase by ` 103.76 lakhs). This is mainly attributable to the Company’s exposure to interest rates on its

variable rate borrowings.

B. Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to

the Company. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from

its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other

financial instruments.

Customer credit risk is managed by the Company’s established policy, procedures and control relating to the customer

credit risk management. The Company uses financial information and past experience to evaluate credit quality of majority

of its customers and individual credit limits are defined in accordance with this assessment. Outstanding receivables and

the credit worthiness of its counterparties are periodically monitored and taken up on case to case basis. Considering

the historical experience of collecting trade receivables, the Company evaluates the concentration of risk with respective

trade receivables as low.

The credit risk on cash and bank balances and deposits with financial institutions is limited because the counterparties are

banks with high credit ratings assigned by international credit rating agencies.

C. Liquidity risk management

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The

Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet

its liabilities when due. Also, the Company has unutilised credit limits with banks. The Company maintained a cautious

liquidity strategy, with a positive cash balance throughout the year ended March 31, 2019 and March 31, 2018. Cash flow

from operating activities provides the funds to service the financial liabilities on a day to day basis.

The Company regularly maintains the rolling forecasts to ensure it has sufficient cash on an on-going basis to meet

operational needs. Any short-term surplus cash generated, over and above the amount required for working capital

management and other operational requirements, is retained as cash and cash equivalents (to the extent required) and

any excess is invested in interest bearing short term deposits with appropriate maturities to optimise the cash returns on

investments while ensuring sufficient liquidity to meet its liabilities.


The table below provides details regarding the contractual maturities of significant financial liabilities as of March 31, 2019

and March 31, 2018:

(` in lakhs)

ParticularsTotal

AmountLess than

1 year

More than 1 and less

than 2 years

More than 2 and less

than 3 years

More than 3 years

March 31, 2019

Trade payables 17,088.59 17,088.59 - - -

Payables for purchase of fixed assets 359.78 359.78 - - -

Borrowings 1,479.58 225.50 1,254.08 - -

Other financial liabilities* 3,341.97 3,341.97 - - -

March 31, 2018

Trade payables 13,231.00 13,231.00 - - -

Payables for purchase of fixed assets 579.98 579.98 - - -

Borrowings 20,751.86 14,272.28 6,479.58 - -

Other financial liabilities* 3,352.83 3,352.83 - - -

* Other financial liabilities include deposits received from customers amounting to ` 2,434.30 lakhs (March 31, 2018:

` 2,361.91 lakhs). These deposits do not have a contractual re-payment term but are repayable on demand. Since, the

Company does not have an unconditional right to defer the payment, these deposits have been classified as current

balances. For including these amounts in the above mentioned maturity analysis, the Company has assumed that these

deposits, including interest thereon, will be repayable at the end of the reporting period. The actual maturity period for

the deposit amount can differ based on the date on which these deposits are settled to customers.

D. Foreign currency risk management

The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate

fluctuations arise.

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities at the

end of the reporting period are as follows:

As at March 31, 2019:

ParticularsAs at March 31, 2019 (All figures in lakhs)

GBP USD EURO `

Assets

Trade Receivables - 20.74 - 1,434.07

Cash and cash equivalents - 2.27 - 156.73

Liabilities

Trade payables - 5.34 - 369.58

Advances received from customers - - - -

As at March 31, 2018:

ParticularsAs at March 31, 2018 (All figures in lakhs)

GBP USD EURO `

Assets

Trade Receivables - 26.15 - 1,704.40

Cash and cash equivalents - 6.24 - 406.92

Liabilities

Trade payables 0.03 5.87 3.85 697.14

Advances received from customers - 0.16 - 10.45

Foreign currency sensitivity analysis

Considering the countries and economic environment in which the Company operates, its operations are subject to

risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in US Dollar,

Great Britain Pound and Euro against the functional currency of the Company.

` 1 strengthening of INR against US Dollar, to which the Company is majorly exposed would have led to approximately

` 17.66 lakhs loss in the Statement of Profit and Loss (Year ended March 31, 2018 - ` 26.36 lakhs gain).

A ` 1 weakening of the INR against US Dollar would have led to an equal but opposite effect.

The sensitivity analysis includes only outstanding foreign currency denominated monetary items.


46. Capital management

The Company’s capital management objective is to maximise the total shareholder return by optimising cost of capital through

flexible capital structure that supports growth. Further, the Company ensures optimal credit risk profile to maintain/enhance

credit rating.

The Company determines that amount of capital on the basis of annual operating plan and long term strategic plans. The

funding requirements are met through internal accruals and long-term/short-term borrowings. The Company monitors the

capital structure on the basis of Net debt to equity ratio and maturity profile of the overall debt portfolio of the Company.

For the purpose of Capital management, capital includes equity capital, securities premium and all other reserves. Net debt

includes all long and short-term borrowings as reduced by cash and cash equivalents.

The following table summarises the net debt to equity ratio of the Company: (` in lakhs)

ParticularsAs at

March 31, 2019As at

March 31, 2018

Long term borrowings, current maturities of long-term debt and short

term borrowings1,479.58 20,751.86

Cash and cash equivalents (including other bank balances) (6,706.03) (1,665.59)

Inter-Corporate Deposit (2,000.00) -

Net debt / Surplus Cash - (A) (7,226.45) 19,086.27

Equity – (B) 76,487.58 56,400.53

Net debt to equity ratio – (A)/(B) (9.45) 0.34

47. Expenses disclosed under the respective notes are net of the following amounts capitalized /(de-capitalized) by the Company under capital work-in- progress / fixed assets:

(` in lakhs)



March 31, 2018

Other expenses (including net exchange differences) - (25.04)

48. The Company’s wholly owned subsidiary, IP India Foundation, carries out Corporate Social Responsibility activities. The

same is not considered for the purpose of consolidation, as the objective of control over this entity is not to obtain

economic benefits from its activities.

49. Disclosure as per Regulation 34(3) and 53(f) of Securities and Exchange Board of India (ListingObligations and Disclosures Requirements) Regulations, 2015:

Loans and advances in the nature of loans given to subsidiaries, associates, firms/companies in which directors are

interested ` Nil (March 31, 2018: ` Nil).

50. Pursuant to the approval of National Company Law Tribunal (NCLT) vide its order dated November 16, 2018 in respect

of the Scheme of Arrangement amongst the Company and its Members under the provisions of Sections 391 to 394 of

the Companies Act, 1956, to transfer on the Appointed Date, the entire amount of ` 28,876.29 lakhs lying in the General

Reserve to the Profit & Loss Account of the Company (“the Scheme”), the required transfers as envisaged by the

Scheme have been made in the books of accounts.

51. Performance Share Plan - Restricted Stock Units

Equity-settled share-based payments

Certain employees of the Company have been granted performance-based restricted stock units (“PSUs”) of International

Paper Company, USA, the ultimate holding company, (“IP Co”) in accordance with the terms and conditions specified in the

Performance Share Plan (“PSP”), from time to time.

The PSP is assessed, managed and administered by IP Co and the PSUs granted as part of the PSP will vest after a period of

3 years from the year the grant is given.

As per the arrangement with IP Co, the cost pertaining to the PSUs granted to the employees of the Company, is recharged

to the Company, based on a fair valuation model.


Movements in the number of share options outstanding and their related weighted average exercise prices as at March 31, 2019 and March 31, 2018:

Particulars

March 31, 2019 March 31, 2018

Number of options

Weighted Average Exercise Price (`)

Number of options

Weighted Average

Exercise Price (`)

Outstanding at the beginning of the year 10,217 3,226 10,551 2,852

Granted during the year 4,302 2,966 3,028 4,143

Forfeited during the year - - 3,362 2,879

Exercised during the year 4,238 2,561 - -

Expired during the year - - - -

Outstanding at the end of the year 10,281 3,587 10,217 3,226

Exercisable at the end of the year 10,281 3,587 10,217 3,226

Weighted average remaining contractual life (in years) 1.73 1.06

Particulars March 31, 2019 March 31, 2018

Grant Date share price – In US $ 46.08 NA

Exercise Price (in Rupees) 3,204.40 NA

Expected Volatility 22.81% - 24.60% 22.75% - 22.9%

Life of the options granted (Vesting and exercise period) in years 3 3

Expected dividends - -

Average risk-free interest rate 1.47% - 2.44% 1.31% - 1.98%

Expected dividend rate - -

52. The Government of India introduced the Goods and Services tax (GST) with effect from July 01, 2017. Accordingly, in

compliance with Indian Accounting Standards (Ind AS), Revenue from operations for the periods beginning July 1, 2017

to March 31, 2019 is presented net of GST. Revenue from operations of earlier periods included Excise duty which now

is subsumed in GST.

53. In the year ended March 31, 2017, the Hon’ble High Court for the State of Telangana and the State of Andhra Pradesh

upheld the validity of levy of electricity duty @ 25 paisa per unit by the State Government on consumption of electricity by

captive generating units relating to earlier years. The Company (along with other petitioners) filed a Special Leave Petition

in the Hon’ble Supreme Court, which in the interim, directed the petitioners to pay partial amount without prejudice to

the rights and contentions of the petitioners, pursuant to which the Company had paid ` 1,502.05 lakhs under protest in

the year ended March 31, 2017. The matter is pending hearing.

In view of the inherent uncertainty in predicting the final outcome of the above litigation, the Management has, on

grounds of prudence and abundant caution, made a provision amounting to ` 2,357.43 lakhs during the year ended March

31, 2017 towards the potential liability in the event of an unfavourable verdict in this matter. Additionally, an amount of

` 1,571.62 lakhs has been disclosed as a contingent liability. On the basis of the legal advice obtained, in the opinion of

the Management no further provision would be required in relation to this disputed matter.

54. Exceptional items

a. During the year ended March 31, 2019:

In respect of a disputed matter which is pending resolution, the Management has, considering the developments

in the case and based on grounds of prudence, made a provision towards the interest demand amounting to

` 542.61 lakhs. The Company has already paid the related duty amount in the earlier years.

b. During the year ended March 31, 2018:

The Management on evaluation of the performance and usefulness of all the fixed assets in use, determined to

de-commission certain fixed assets which are not required for the continued or future business operations of the

Company. Consequently, the net book value of these assets (net of its fair value less costs to sell) has been re-

classified in the Balance Sheet as ‘Assets classified as held for sale’ and ` 836.56 lakhs representing the write-down

of the net book value was disclosed as an Exceptional Item in the Statement of Profit and Loss.


55. The financial statements are approved for issue by the Board of Directors on May 02, 2019.

For International Paper APPM Limited

Donald P. Devlin Chairman & Managing Director




NOTES

INTERNATIONAL PAPER APPM LIMITED(Formerly known as The Andhra Pradesh Paper Mills Limited)

(CIN L21010AP1964PLC001008)

www.ipappm.com

Advis

ory

& D

esig

n: w

ww

.corp

com

mstu

dio

.in

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